Deliberately Stochastic | Zendy

Simone CerreiaVioglio | Zendy; David Dillenberger | Zendy; Pietro Ortoleva | Zendy; Gil Riella | Zendy

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Deliberately Stochastic

Author(s) -

Simone CerreiaVioglio,

David Dillenberger,

Pietro Ortoleva,

Gil Riella

Publication year - 2019

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.20180688

Subject(s) - complementarity (molecular biology) , monotonic function , mathematical economics , outcome (game theory) , economics , set (abstract data type) , representation (politics) , mathematics , econometrics , mathematical optimization , computer science , mathematical analysis , genetics , politics , political science , law , biology , programming language

We study stochastic choice as the outcome of deliberate randomization. We derive a general representation of a stochastic choice function where stochasticity allows the agent to achieve from any set the maximal element according to her underlying preferences over lotteries. We show that in this model stochasticity in choice captures complementarity between elements in the set, and thus necessarily implies violations of Regularity/Monotonicity, one of the most common properties of stochastic choice. This feature separates our approach from other models, e.g., Random Utility. (JEL D80, D81)

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