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Stochastic models of choice behavior
Author(s) -
Becker Gordon M.,
Degroot Morris H.,
Marschak Jacob
Publication year - 2007
Publication title -
behavioral science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.371
H-Index - 45
eISSN - 1099-1743
pISSN - 0005-7940
DOI - 10.1002/bs.3830080106
Subject(s) - preference , ordinal scale , rank (graph theory) , ordinal data , preference theory , set (abstract data type) , decision maker , revealed preference , expected utility hypothesis , econometrics , mathematical economics , interval (graph theory) , scale (ratio) , order (exchange) , function (biology) , computer science , mathematics , operations research , statistics , economics , geography , cartography , finance , combinatorics , evolutionary biology , biology , programming language
The notion of “utility” is fundamental in most current theories of human decision. The problem of determining the utility function of a given decision maker, however, presents grave difficulties. It is not sufficient to determine the decision maker's rank‐order preference of choices, because such a rank‐order preference would determine his utility only on an ordinal scale, not the interval scale required in many decision problems. The problem is further complicated by the fact that even the preference choices of the chooser are often inconsistent with each other. T o circumvent the latter difficulty, stochastic definitions of utilities have been proposed in which probabilities (frequencies) of preference choices become the basic data. Here the implications of some of these models are derived which enable the experimenter to decide whether a given model is consistent with a set of data. Appropriate statistical sampling tests are worked out.