What is interpretation of random choice for individual DM

Assignment Help Business Economics

Reference no: EM13838556

Due to McFadden Economists usually interpret Random Choice, in the population sense, as each DM being drawn from the probabilistic choice rule independently and identically. However, Psychologist has maintained that individual DM is actually stochastic, in the sense that when presented with the same menu several times they would choose different alternatives. I am not fully convinced by either way of understanding probability in Decision Making, is there any work on understanding this, neuro economics, epistemological or anything related. In short, what is the interpretation of random choice for an individual DM?

Reference no: EM13838556

Questions Cloud

Examples of immizerizing growth : For a course in international trade, our professor touched on the idea of immiserizering growth. He emphasized that immiserizing growth was a theoretical outcome from specialization of trade and did not provide the class with examples on the global m..

Optimal taxation literature-kind of policy prescriptions : One common criticism in the optimal taxation literature is the specification of the social welfare function. The optimal taxation literature (I have the Mirrlees framework in mind) relies on first specifying a social welfare function. what kind of po..

Measurement and reciprocity of social cost : Two common drawbacks of Pigouvian subsidy mentioned in the literature are related to monetisation and measurement of social cost (Baumol) and reciprocity of social cost (Coase). What alternatives to Pigouvian taxes are proposed in the literature? Hav..

Nash equilibrium in finite strategic form games is proven : In the Jehle and Reny textbook (which I should add I have not read much of beyond a few sections of interest), a theorem stating that there is always a (mixed) Nash equilibrium in finite strategic form games is proven. Similarly, I would also suspect..

What is interpretation of random choice for individual DM : Due to McFadden Economists usually interpret Random Choice, in the population sense, as each DM being drawn from the probabilistic choice rule independently and identically. However, Psychologist has maintained that individual DM is actually stochast..

What are adverse selection and moral hazard : What is monetary policy and who is responsible for its implementation? What is the central bank and what does it do? What are adverse selection and moral hazard?

Theory of poverty traps : As far as I can tell, research on the economics of poverty is very empirically driven, and this is probably appropriate. What kind of economic theory has been developed though? I'd also be interested in theory of some influence too. As an example, I ..

About the machina paradox and the expected utility model : This question is related to this question about the Machina paradox and about the expected utility model. In this question, I'd like to know a little more about various or even competing ways of specifying utility and decision making. It'd be nice if..

Banking system behaviour : Does anyone know of any work on banking system behaviour, and in particular the governing regulatory frameworks that applied between the 1973 collapse of the gold standard based Bretton Woods system and the introduction of the Basel Accords and capit..

User Account

All Pages