Identification with Additively Separable Heterogeneity

68 Pages Posted: 21 Nov 2017 Last revised: 19 Feb 2019

See all articles by Roy Allen

Roy Allen

University of Western Ontario - Department of Economics

John Rehbeck

Ohio State University (OSU) - Economics

Date Written: December 18, 2018

Abstract

This paper provides nonparametric identification results for a class of latent utility models with additively separable unobservable heterogeneity. These results apply to existing models of discrete choice, bundles, decisions under uncertainty, and matching. Under an independence assumption, such models admit a representative agent. As a result, we can identify how regressors alter the desirability of goods using only average demands. Moreover, average indirect utility (“welfare”) is identified without needing to specify or identify the distribution of unobservable heterogeneity.

Keywords: Nonparametric Identification, Representative Agent, Symmetry, Welfare

JEL Classification: C01, C14, C25, C30, C43

Suggested Citation

Allen, Roy and Rehbeck, John, Identification with Additively Separable Heterogeneity (December 18, 2018). Available at SSRN: https://ssrn.com/abstract=3073945 or http://dx.doi.org/10.2139/ssrn.3073945

Roy Allen (Contact Author)

University of Western Ontario - Department of Economics ( email )

Social Science Centre, Room 4071
London, Ontario N6A 5C2
Canada

John Rehbeck

Ohio State University (OSU) - Economics ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States

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