Rational expectation of mistakes and a measure of error-proneness

• 成果类型: Article
• 署名作者: Ke, Shaowei
• 署名单位: University of Michigan System; University of Michigan
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE2477
• 发表日期: 2018-05-01
• 页码: 527-552
• 关键词: Stochastic choice; error-proneness; logit model

摘要

We characterize axiomatically a stochastic choice model, the consistent-mistakes model (CMM), that describes an error-prone decision maker's choices. In contrast to random utility models, CMMs generate closed-form choice probability. Under the axioms, we uniquely identify from the choices an expected utility function that represents the decision maker's true preference and a propensity function that describes how likely an alternative is to be chosen. We introduce a measure of error-proneness and show that the logit model of mistakes is a CMM with a constant measure of error-proneness, characterized by a strong version of the independence axiom from expected utility theory. We analyze the properties of models of mistakes.