2008/03/01 by Thomas J. Steenburgh · 1 citation
Economics, Econometrics and Finance · Decision Sciences · Business, Management and Accounting · Mathematics · #Economic and Environmental Valuation #Decision-Making and Behavioral Economics #Consumer Market Behavior and Pricing #Counterintuitive #Substitution (logic) #Economics #Property (philosophy) #Invariant (physics) #Econometrics #Discrete choice #Mathematical economics #Context (archaeology) #Covariance #Microeconomics #Computer science #Mathematics #Statistics
paper · doi:10.1287/mksc.1070.0301
openalex publication_date 2008/03/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/05/21
This article introduces a newly discovered property of discrete-choice models, which I call the invariant proportion of substitution (IPS). Like the independence from irrelevant alternatives (IIA) property, IPS implies individual behavior that is counterintuitive in the context of choice among similar alternatives. But models that alleviate the concerns raised by IIA, such as generalized extreme value and covariance probit models, do not necessarily alleviate the concerns raised by IPS. I explore the implications of the IPS property on individual behavior in several choice contexts and discuss some models that alleviate the concerns raised by IPS.