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The Decision-Conflict and Multicriteria Logit

Georgios Gerasimou

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Abstract: We study two tractable random non-forced choice models that explain behavioural patterns suggesting that the choice-deferral outside option is often selected when people find it hard to decide between the market alternatives available to them, even when these are few and desirable. The *decision-conflict logit* extends the logit model with an outside option by assigning a menu-dependent value to that option. This value captures the degree of complexity/decision difficulty at the relevant menu and allows for the choice probability of the outside option to either increase or decrease when the menu is expanded, depending on *how many* as well as *how attractive* options are added to it. The *multicriteria logit* is a special case of this model and introduces multiple utility functions that jointly predict behaviour in a multiplicative-logit way. Every multicriteria logit admits a simple discrete-choice formulation.

Date: 2020-08, Revised 2020-11
New Economics Papers: this item is included in nep-dcm and nep-upt
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