Breitmoser, Yves
(2016):
*Stochastic choice, systematic mistakes and preference estimation.*

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## Abstract

Individual choice exhibits "presentation effects" such as default, ordering and round-number effects. Using existing models, presentation effects bias utility estimates, which suggests instability of preferences and obscures behavioral patterns. This paper derives a generalized model of stochastic choice by weakening logit's axiomatic foundation. Weakening the axioms implies that focality of options is choice-relevant, alongside utility, which entails presentation effects. The model is tested on four well-known studies of dictator games exhibiting typical round-number patterns. The generalized logit model captures the choice patterns reliably, substantially better than existing models: it robustly predicts and controls for the round-number effects, thus provides "clean" utility estimates that are stable and predictive across experiments.

Item Type: | MPRA Paper |
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Original Title: | Stochastic choice, systematic mistakes and preference estimation |

Language: | English |

Keywords: | stochastic choice, systematic mistakes, axiomatic foundation, utility estimation, dictator game |

Subjects: | C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C90 - General D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles |

Item ID: | 72779 |

Depositing User: | Yves Breitmoser |

Date Deposited: | 31 Jul 2016 04:45 |

Last Modified: | 30 Sep 2019 10:07 |

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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/72779 |