The (Neural) Dynamics of Stochastic Choice

Ryan Webb

Management Science, 2019, vol. 65, issue 1, 230-255

Abstract: The standard framework for modeling stochastic choice, the random utility model, is agnostic about the temporal dynamics of the decision process. In contrast, a general class of bounded accumulation models from psychology and neuroscience explicitly relate decision times to stochastic choice behavior. This article demonstrates that a random utility model can be derived from the general class of bounded accumulation models, and characterizes how the resulting distribution of random utility depends on response time. This relationship can bias the estimation of structural preference parameters. The bias can be alleviated via the inclusion of standard observables directly in the econometric specification, or through incorporating novel observables such as response time or neurobiological data. Examples of estimating risk and brand preferences are pursued.

Keywords: neuroeconomics; stochastic choice; random utility; bounded accumulation; drift diffusion; scale heterogeneity; generalized multinomial logit (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (37)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:65:y:2019:i:1:p:230-255

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