A new paper - Random Quasi-linear Utility

[Erya Yang]

Dear all,

Attached is a new paper:

Random Quasi-linear Utility

Erya Yang and Igor Kopylov

Abstract: We propose a random quasi-linear utility model (RQUM) where stochastic choices maximize quasi-linear utility functions that are randomly drawn via some probability distribution π. Utility ties are allowed and broken by a convenient lexicographic rule. Our main result characterizes RQUM and identifies the probability measure π uniquely and explicitly in terms of stochastic choice data. McFadden’s (1973) additive random utility model is obtained as a special case where ties have probability zero. Another distinct case captures finite populations and derives π with a finite support. Our main axioms constrain aggregate effects of cost variations on choice probabilities. In particular, context and reference dependence are prohibited. We also characterize RQUM through a suitable version of McFadden and Richter’s (1990) axiom of revealed stochastic preferences (ARSP). This approach extends to incomplete datasets.

This is a cool paper that should be of interest to decision theorists who study random utility models. I plan to send it to RUD 2023.

Best,

Erya Yang

Assistant Professor, 

Business School, Sun Yat-sen University, Shenzhen, China

yan...@mail.sysu.edu.cn