Supplement to 'The Inverse Product Differentiation Logit Model'

Fosgerau, Mogens; Monardo, Julien; Palma, André de

doi:10.2139/ssrn.3419559

Cited by 16 publications

(14 citation statements)

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“…Our equivalence result generalizes to perturbed random utility models (e.g., Hofbauer and Sandholm, 2002; Fudenberg et al., 2015) where the information cost is the Bregman information associated with a (negative) generalized entropy (Fosgerau et al., 2019). We are also exploring connections between our results and those in the decision theory literature.…”

Section: Discussionmentioning

confidence: 59%

“…The properties in Proposition A1 are satisfied by any inverse scaled demand corresponding to an ARUM but do not characterize ARUM. In fact, the properties may be used to define a class of generalized entropies that is strictly larger than the class consisting of those generalized entropies corresponding to ARUM (see Fosgerau et al., 2019). We have not found direct conditions that characterize those generalized entropies that correspond to ARUM.…”

Section: Discussionmentioning

confidence: 99%

“…Fosgerau et al. (2019) construct a class of inverse demand models that are useful for estimating demand for differentiated products using Berry's (1994) method. We contribute to that literature in two ways.…”

Section: Introductionmentioning

confidence: 99%

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Discrete Choice and Rational Inattention: A General Equivalence Result

Fosgerau

Melo

Palma

et al. 2020

Int Economic Review

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This article establishes a general equivalence between discrete choice and rational inattention models. Matějka and McKay (2015) showed that when information costs are modeled using the Shannon entropy, the choice probabilities in the rational inattention (RI) model take the multinomial logit form. We show that, for one given prior over states, RI choice probabilities may take the form of any additive random utility discrete choice model (ARUM) when the information cost is a Bregman information, a class defined in this article. The prior information of the rationally inattentive agent is summarized in a constant vector of utilities in the corresponding ARUM.

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Section: Discussionmentioning

confidence: 59%

Section: Discussionmentioning

confidence: 99%

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Discrete Choice and Rational Inattention: A General Equivalence Result

Fosgerau

Melo

Palma

et al. 2020

Int Economic Review

Self Cite

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show abstract

“…We also provide the reader with several classes of perturbations that allow flexibility in best responses and can be used in the study of games. Other perturbations that may be useful are developed for discrete choice analysis in [9,10]. Although many of the models presented have many parameters, one can simplify estimation by making homogeneity assumptions across individuals.…”

Section: Discussionmentioning

confidence: 99%

“…On the practical side, it may be easier to place restrictions on perturbation functions than restricting the additive error term of QRE since analytical results for integrating error distributions are known only in some special cases. In contrast, rich classes of analytical perturbation functions are studied in [9,10]. These perturbation functions can be seen as generalizations of the entropy function that is often used to study limited attention.…”

Section: Introductionmentioning

confidence: 99%