A characterization of the Luce choice rule for an arbitrary collection of menus

Carlos Alós-Ferrer, Maximilian Mihm

Research output: Contribution to journalArticlepeer-review

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 probabilities. Building upon this characterization, we derive implications for experimental design in terms of three criteria: falsification, identification, and prediction.

Original languageEnglish (US)
Article number105941
JournalJournal of Economic Theory
Volume223
DOIs
StatePublished - Jan 2025

Keywords

  • Censored Luce choice rule
  • Luce choice rule
  • Multinomial logit model
  • Stochastic choice

ASJC Scopus subject areas

  • Economics and Econometrics

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