Consumer Preference Axioms: Behavioral Postulates for Describing and Predicting Stochastic Choice

John R. Hauser
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John R. Hauser: Northwestern University

Management Science, 1978, vol. 24, issue 13, 1331-1341

Abstract: This paper draws on econometrics, von Neumann-Morgenstern utility theory, stochastic choice theory, and consumer behavior to develop five basic axioms or postulates of stochastic choice behavior. These axioms imply the existence and uniqueness of a preference function which identifies how consumers evaluate products in terms of product attributes. The preference function produces a scalar goodness measure for each product in a consumer's choice set. These goodness measures then predict choice probabilities for each product in a consumer's choice set. The advantage of these axioms is that they extend the strengths of von Neumann-Morgenstern theory to stochastic choice and make possible the determination of consistent choice probabilities.

Keywords: marketing: buyer behavior; utility/preference: theory; decision analysis (search for similar items in EconPapers)
Date: 1978
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:24:y:1978:i:13:p:1331-1341

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