Yogurts Choose Consumers? Estimation of Random Utility Models via Two-Sided Matching

62 Pages Posted: 9 Mar 2017 Last revised: 27 Jul 2020

See all articles by Odran Bonnet

Odran Bonnet

Sciences Po

Alfred Galichon

NYU, Department of Economics and Courant Institute

Yu-Wei Hsieh

University of Southern California - Department of Economics; USC Dornsife Institute for New Economic Thinking

Keith O'Hara

New York University (NYU)

Matthew Shum

California Institute of Technology

Date Written: September 16, 2015

Abstract

The problem of demand inversion -- a crucial step in the estimation of random
utility discrete-choice models -- is equivalent to the determination of stable outcomes in
two-sided matching models. This equivalence applies to random utility models that are not
necessarily additive, smooth, nor even invertible. Based on this equivalence, algorithms
for the determination of stable matchings provide e ffective computational methods for
estimating these models. For non-invertible models, the identifi ed set of utility vectors
is a lattice, and the matching algorithms recover sharp upper and lower bounds on the
utilities. For invertible models, our matching approach facilitates estimation of models that
were previously dicult to estimate, such as the pure characteristics model. An empirical
application to voting data from the 1999 European Parliament elections illustrates the
good performance of our matching-based demand inversion algorithms in practice.

Keywords: random utility models, demand inversion, two-sided matching, discrete choice demand models, partial identiļ¬cation, pure characteristics model

JEL Classification: C51, C60

Suggested Citation

Bonnet, Odran and Galichon, Alfred and Hsieh, Yu-Wei and O'Hara, Keith and Shum, Matthew, Yogurts Choose Consumers? Estimation of Random Utility Models via Two-Sided Matching (September 16, 2015). Available at SSRN: https://ssrn.com/abstract=2928876 or http://dx.doi.org/10.2139/ssrn.2928876

Odran Bonnet

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

Alfred Galichon

NYU, Department of Economics and Courant Institute ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States

Yu-Wei Hsieh

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

USC Dornsife Institute for New Economic Thinking ( email )

3620 S. Vermont Avenue, KAP 364F
Los Angeles, CA 90089-0253
United States

Keith O'Hara

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Matthew Shum (Contact Author)

California Institute of Technology ( email )

Pasadena, CA 91125
United States

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