Economics at your fingertips  

Stochastic choice, systematic mistakes and preference estimation

Yves Breitmoser ()

MPRA Paper from University Library of Munich, Germany

Abstract: Individual choice exhibits "presentation effects" such as default, ordering and round-number effects. Using existing models, presentation effects bias utility estimates, which suggests instability of preferences and obscures behavioral patterns. This paper derives a generalized model of stochastic choice by weakening logit's axiomatic foundation. Weakening the axioms implies that focality of options is choice-relevant, alongside utility, which entails presentation effects. The model is tested on four well-known studies of dictator games exhibiting typical round-number patterns. The generalized logit model captures the choice patterns reliably, substantially better than existing models: it robustly predicts and controls for the round-number effects, thus provides "clean" utility estimates that are stable and predictive across experiments.

Keywords: stochastic choice; systematic mistakes; axiomatic foundation; utility estimation; dictator game (search for similar items in EconPapers)
JEL-codes: C10 C90 D03 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-dcm, nep-evo, nep-hpe, nep-ore and nep-upt
Date: 2016-07-28
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link) original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Series data maintained by Joachim Winter ().

Page updated 2018-01-30
Handle: RePEc:pra:mprapa:72779