Behavioral and Descriptive Forms of Choice Models

42 Pages Posted: 7 Apr 2014 Last revised: 30 Sep 2014

See all articles by Ariel Pakes

Ariel Pakes

National Bureau of Economic Research (NBER); Harvard University - Department of Economics

Date Written: March 2014

Abstract

Empirical work on choice models, especially work on relatively new topics or data sets, often starts with descriptive, or what is often colloquially referred to as "reduced form", results. Our descriptive form formalizes this process. It is derived from the underlying behavioral model, has an interpretation in terms of fit, and can sometimes be used to quantify biases in agents' expectations. We consider estimators for the descriptive form of discrete choice models with (and without) interacting agents that take account of approximation errors as well as unobservable sources of endogeneity. We conclude with an investigation of the descriptive form of two period entry models.

Suggested Citation

Pakes, Ariel, Behavioral and Descriptive Forms of Choice Models (March 2014). NBER Working Paper No. w20022. Available at SSRN: https://ssrn.com/abstract=2421122

Ariel Pakes (Contact Author)

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