A characterization of the Luce choice rule for an arbitrary collection of menus

Carlos Alós-Ferrer and Maximilian Mihm

Journal of Economic Theory, 2025, vol. 223, issue C

Abstract: The Luce Choice Rule (or, equivalently, the multinomial logit model) is extensively used in economics and other fields. Classical characterizations rest on Luce's Choice Axiom, when all choice sets are available, and Luce's Product Rule in the case of binary choice. Yet, actual datasets typically consist neither of all choice sets nor all binary choice sets. We provide a characterization for the general case, allowing also for zero choice probabilities. Building upon this characterization, we derive implications for experimental design in terms of three criteria: falsification, identification, and prediction.

Keywords: Luce choice rule; Multinomial logit model; Stochastic choice; Censored Luce choice rule (search for similar items in EconPapers)
JEL-codes: D01 D90 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:223:y:2025:i:c:s0022053124001479

DOI: 10.1016/j.jet.2024.105941

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