American Economic Review Vol. 109 No. 7 2019

Deliberately Stochastic

Simone Cerreia-Vioglio¹; David Dillenberger²; Pietro Ortoleva³; Gil Riella⁴

¹ Department of Decision Sciences, Università Bocconi, Via Sarfatti, 25 Milano, Italy, and IGIER (email: ) · ² Department of Economics, University of Pennsylvania, Philadelphia, PA 19104 (email: ) · ³ Department of Economics and Woodrow Wilson School, Princeton University, Princeton, NJ 08544 (email: ) · ⁴ Escola de Políticas Públicas e Governo and Brazilian School of Public and Business Administration Getulio Vargas Foundation, SGAN, Quadra 602, Brasilia/DF/Brazil, 70830-051 (email: )

Abstract

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.

DOI

10.1257/aer.20180688

Volume

109

Issue

7

Pages

2425-2445

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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