Odds Supermodularity and the Luce Rule

21 Pages Posted: 3 Mar 2018 Last revised: 2 Jun 2020

See all articles by Serhat Dogan

Serhat Dogan

Bilkent University - Department of Economics

Kemal Yildiz

Bilkent University - Department of Economics

Date Written: January 1, 2019

Abstract

We present a characterization of the Luce rule in terms of positivity and a new choice axiom called odds supermodularity that strengthens the regularity axiom. This new characterization illuminates a connection that goes unnoticed and sheds light on the behavioral underpinnings of the Luce rule and its extensions from a different perspective. We show that odds supermodularity per se characterizes a structured extension of the Luce rule that accommodates zero probability choices. We identify the random choice model characterized via a stochastic counterpart of Plott (1973)’s path independence axiom, which strengthens odds supermodularity.

Keywords: Random Choice, Luce Rule, Supermodularity

JEL Classification: D01, D07, D09

Suggested Citation

Dogan, Serhat and Yildiz, Kemal, Odds Supermodularity and the Luce Rule (January 1, 2019). Available at SSRN: https://ssrn.com/abstract=3133822 or http://dx.doi.org/10.2139/ssrn.3133822

Serhat Dogan

Bilkent University - Department of Economics ( email )

06533 Ankara
Turkey

Kemal Yildiz (Contact Author)

Bilkent University - Department of Economics ( email )

Bilkent University, Dept. of Economics
BILKENT
Ankara, 06800
Turkey

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