2023/02/11 by Christopher Turansick, Turansick, Christopher
Economics, Econometrics and Finance · Decision Sciences · Social Sciences · #Economic and Environmental Valuation #Decision-Making and Behavioral Economics #Experimental Behavioral Economics Studies
paper · pdf · doi:10.48550/arxiv.2302.05806
We study consumption dependence in the context of random utility and repeated choice. We show that, in the presence of consumption dependence, the random utility model is a misspecified model of repeated rational choice. This misspecification leads to biased estimators and failures of standard random utility axioms. We characterize exactly when and by how much the random utility model is misspecified when utilities are consumption dependent.