Fechner’s strong utility model for choice among n>2 alternatives: Risky lotteries, Savage acts, and intertemporal payoffs
Journal of Mathematical Economics, 2018, vol. 79, issue C, 75-82
This paper generalizes a classic Fechner model (also known as strong utility) of probabilistic/stochastic binary choice to choice among several alternatives. Special cases of the model include Luce’s choice model, multivariate probit and deterministic preferences. The proposed model can be interpreted as an econometric model of discrete choice with correlated random errors additive on the (latent) utility scale. Behavioral characterization/axiomatization of the model is provided for choice under risk (with expected utility), uncertainty/ambiguity (with subjective expected utility) and intertemporal choice (with additively separable utility that includes constant discounting, quasi-hyperbolic discounting, generalized hyperbolic discounting and liminal discounting as special cases).
Keywords: Fechner model; Strong utility; Risk; Uncertainty; Intertemporal choice (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:79:y:2018:i:c:p:75-82
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