Random Utility with Aggregation
Fuente:
arXiv
Gespeichert in:
| Hauptverfasser: | , , |
|---|---|
| Format: | Preprint |
| Veröffentlicht: |
2025
|
| Schlagworte: | |
| Online-Zugang: | |
| Tags: |
Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
|
| _version_ | 1866912949713502208 |
|---|---|
| author | Liao, Yuexin Saito, Kota Sandroni, Alec |
| author_facet | Liao, Yuexin Saito, Kota Sandroni, Alec |
| contents | We study random utility (RU) rationality with aggregation when the underlying alternatives in each aggregate vary across consumers and are unobserved, as is typical for an outside option. RUM over the underlying alternatives is the natural assumption on the data generating process, while an aggregated random utility model (ARUM) is the standard empirical tool. We characterize RU rationality in three frameworks and show its testable implications are substantially weaker than those of an ARUM. We provide two independent conditions for their equivalence: non-overlapping preferences within aggregates and menu-independent aggregation. Simulations show that violating either condition produces meaningful estimation bias when imposing an ARUM. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2506_00372 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Random Utility with Aggregation Liao, Yuexin Saito, Kota Sandroni, Alec Theoretical Economics We study random utility (RU) rationality with aggregation when the underlying alternatives in each aggregate vary across consumers and are unobserved, as is typical for an outside option. RUM over the underlying alternatives is the natural assumption on the data generating process, while an aggregated random utility model (ARUM) is the standard empirical tool. We characterize RU rationality in three frameworks and show its testable implications are substantially weaker than those of an ARUM. We provide two independent conditions for their equivalence: non-overlapping preferences within aggregates and menu-independent aggregation. Simulations show that violating either condition produces meaningful estimation bias when imposing an ARUM. |
| title | Random Utility with Aggregation |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2506.00372 |