Odds Supermodularity and the Luce Rule
21 Pages Posted: 3 Mar 2018 Last revised: 2 Jun 2020
Date Written: January 1, 2019
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: Suggested Citation