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Discrete Choice under Risk with Limited Consideration

Levon Barseghyan, Francesca Molinari and Matthew Thirkettle

American Economic Review, 2021, vol. 111, issue 6, 1972-2006

Abstract: This paper is concerned with learning decision-makers' preferences using data on observed choices from a finite set of risky alternatives. We propose a discrete choice model with unobserved heterogeneity in consideration sets and in standard risk aversion. We obtain sufficient conditions for the model's semi-nonparametric point identification, including in cases where consideration depends on preferences and on some of the exogenous variables. Our method yields an estimator that is easy to compute and is applicable in markets with large choice sets. We illustrate its properties using a dataset on property insurance purchases.

JEL-codes: D81 D83 D91 G22 G52 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (15)

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Working Paper: Discrete Choice under Risk with Limited Consideration (2021) Downloads
Working Paper: Discrete choice under risk with limited consideration (2020) Downloads
Working Paper: Discrete choice under risk with limited consideration (2019) Downloads
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DOI: 10.1257/aer.20190253

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