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Title: Discrete Choice under Risk with Limited Consideration
This paper is concerned with learning decision-makers’ preferences using data on observed choices from a finite set of risky alternatives. We propose a discrete choice model with unobserved heterogeneity in consideration sets and in standard risk aversion. We obtain sufficient conditions for the model’s semi-nonparametric point identification, including in cases where consideration depends on preferences and on some of the exogenous variables. Our method yields an estimator that is easy to compute and is applicable in markets with large choice sets. We illustrate its properties using a dataset on property insurance purchases. (JEL D81, D83, D91, G22, G52)  more » « less
Award ID(s):
1824448
PAR ID:
10297899
Author(s) / Creator(s):
; ;
Date Published:
Journal Name:
American Economic Review
Volume:
111
Issue:
6
ISSN:
0002-8282
Page Range / eLocation ID:
1972 to 2006
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
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