Dual random utility maximisation
Paola Manzini () and
Journal of Economic Theory, 2018, vol. 177, issue C, 162-182
Many prominent regularities of stochastic choice, such as the attraction, similarity and compromise effects, are incompatible with Random Utility Maximisation (RUM) as they violate Monotonicity. We argue that these regularities can be conveniently represented by a variation of RUM in which utility depends on only two states and state probabilities are allowed to depend on the menu. We call this model Dual Random Utility Maximisation (dRUM). dRUM is a parsimonious model that admits violations of Monotonicity. We characterise dRUM in terms of three transparent expansion/contraction conditions. We also characterise the important special case in which state probabilities are constant across menus.
Keywords: Stochastic choice; Attraction effect; Similarity effect (search for similar items in EconPapers)
JEL-codes: D03 D01 (search for similar items in EconPapers)
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Working Paper: Dual Random Utility Maximisation (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:177:y:2018:i:c:p:162-182
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