The RUM Paradox
Posted: 1 Apr 2009
Date Written: March 30, 2009
Abstract
This paper establishes the following: Random Utility Models (RUMs) that assume consistent preferences result in inconsistent and therefore irrational choice behavior. Paradoxically, it is possible to create RUMs that result in consistent choice behavior, but these models assume inconsistent preferences.
Keywords: random utility models, RUM, independence from irrelevant alternatives, IIA, rationality, choice theory, similarity critique
JEL Classification: C1, C11, C21, C25, C35, C52, D12, M31
Suggested Citation: Suggested Citation
Steenburgh, Thomas J., The RUM Paradox (March 30, 2009). Available at SSRN: https://ssrn.com/abstract=1370388
Thomas J. Steenburgh (Contact Author)
University of Virginia - Darden Graduate School of Business ( email )
P.O. Box 6550
Charlottesville, VA 22906-6550
United States