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A Characterization of the Luce Choice Rule for an Arbitrary Collection of Menus

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Forthcoming
<mark>Journal publication date</mark>3/12/2024
<mark>Journal</mark>Journal of Economic Theory
Number of pages40
Publication StatusAccepted/In press
<mark>Original language</mark>English

Abstract

The Luce Choice Rule (or, equivalently, the multinomial logit model) is
extensively used in economics and other fields. Classical characterizations
rest on Luce’s Choice Axiom, when all choice sets are available, and Luce’s
Product Rule in the case of binary choice. Yet, actual datasets typically
consist neither of all choice sets nor all binary choice sets. We provide
a characterization for the general case, allowing also for zero choice prob-
abilities. Building upon this characterization, we derive implications for
experimental design in terms of three criteria: falsification, identification,
and prediction.