Econometrica: May 2016, Volume 84, Issue 3

Menu-Dependent Stochastic Feasibility

https://doi.org/10.3982/ECTA12694
p. 1203-1223

Richard L. Brady, John Rehbeck

We examine the role of stochastic feasibility in consumer choice using a (RCCSR) and uniquely characterize the model from conditions on stochastic choice data. Feasibility is modeled to permit correlation in availability of alternatives. This provides a natural way to examine substitutability/complementarity. We show that an RCCSR generalizes the of [Manzini and Mariotti, 2014]. We then relate this model to existing literature. In particular, an RCCSR is not a random utility model.

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Supplemental Material

Supplement to "Menu-Dependent Stochastic Feasibility"

Appendix B contains a discussion on an alternative form of conditioning for feasible set probabilities.  Appendix C replaces IFO with a condition which restricts the support of π to sets of at most two elements.  Appendix D examines differences between the regular Perception Adjusted Luce Model and an RCCSR.

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