Discrete Choice and Stochastic Utility Maximization

Ruud Koning and Geert Ridder ()

Economics Working Paper Archive from The Johns Hopkins University,Department of Economics

Abstract: Discrete choice models are usually derived from the assumption of random utility maximization We consider the reverse problem whether choice probablities are consistent with maximization of random utilities This leads to tests that consider the variation in these choice probabilities with the average utilities of the alternatives By restricting the range of the average utilities we obtain a sequence of tests with fewer maintained hypotheses In an empirical application even the weakest test rejects the hypothesis of random utility maximization

Date: 1999-03-03
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Journal Article: Discrete choice and stochastic utility maximization (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:jhu:papers:413

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