Moderate Utility

doi:10.1257/aeri.20230085

2024-06-01

PRE

Junnan He *

Paulo Natenzon

DOI：10.1257/aeri.20230085

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摘要

En 中文

Hotelling's and Salop's spatial competition models , as well as nested logit , covariance probit , elimination -by -aspects , and several other well-known discrete choice models , belong to the class of moderate utility models , where binary choices are a function of the ratio between utility difference and a product differentiation index satisfying the properties of a distance metric. We provide a behavioral foundation for this class of models. Our main result establishes that moderate utility has a single , directly testable implication: choice probabilities are moderately transitive. We use our characterization to show how the model achieves a useful compromise between explanatory power and predictive power . ( JEL C25, D11, D91 )

Keyword:

STOCHASTIC CHOICE

PROBABILITIES

SIMILARITY

LAW