This paper highlights a previously unnoticed property of commonly-used discrete choice models, which is that they feature parallel demand curves. Specifically, we show in additive random utility inverse aggregate curves shift with respect to variety if and only the shocks follow Gumbel (Type 1 Extreme Value) distribution. Using results from Value Theory, provide conditions for other distributio...

Abstract We provide a generic method to find full dynamical solutions binary decision models with interactions. In these models, agents follow stochastic evolution where they must choose between two possible choices by taking into account the of their peers. illustrate our solving Kirman and Föllmer’s ant recruitment model for any number N discrete choice parameters, recovering past results fou...

A large body of discrete-choice demand studies estimate a model in which the consumer’s budget constraint is not taken into account. We illustrate how incorrectly specifying consideration set, when fact binds for some products, may bias estimates. and quantify nature three ways: (i) analytical examples; (ii) field data commonly used literature (iii) Monte Carlo study. find that price sensitivit...