The Dynamics of Stochastic Choice

Posted: 1 Mar 2013 Last revised: 1 Aug 2018

Ryan Webb

University of Toronto

Date Written: July 25, 2016

Abstract

The random utility model is the standard empirical framework for modelling stochastic choice behaviour in applied settings. Though the distribution of stochastic choice has important implications for both testing behavioural theories and predicting behaviour, the theoretical and empirical foundations of this distribution are not well understood. Moreover, the random utility framework has so far been agnostic about the dynamics of the decision process that are of considerable interest in psychology and neuroscience, captured by a class of bounded accumulation models which relate decision times to stochastic behaviour. This article demonstrates that a random utility model can be derived from a general class of bounded accumulation models, in which particular features of this dynamic process restrict the form of the relationship between observables and the distribution of stochastic choice.

Keywords: Neuroeconomics, Stochastic Choice, Random Utility, Bounded Accumulation, Drift Diffusion, Discrete Choice Econometrics

JEL Classification: D87, C12

Suggested Citation

Webb, Ryan, The Dynamics of Stochastic Choice (July 25, 2016). Available at SSRN: https://ssrn.com/abstract=2226018 or http://dx.doi.org/10.2139/ssrn.2226018

Ryan Webb (Contact Author)

University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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