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Title: Heterogeneous Choice Sets and Preferences
We propose a robust method of discrete choice analysis when agents' choice sets are unobserved. Our core model assumes nothing about agents' choice sets apart from their minimum size. Importantly, it leaves unrestricted the dependence, conditional on observables, between choice sets and preferences. We first characterize the sharp identification region of the model's parameters by a finite set of conditional moment inequalities. We then apply our theoretical findings to learn about households' risk preferences and choice sets from data on their deductible choices in auto collision insurance. We find that the data can be explained by expected utility theory with low levels of risk aversion and heterogeneous non‐singleton choice sets, and that more than three in four households require limited choice sets to explain their deductible choices. We also provide simulation evidence on the computational tractability of our method in applications with larger feasible sets or higher‐dimensional unobserved heterogeneity.  more » « less
Award ID(s):
1824448
PAR ID:
10297901
Author(s) / Creator(s):
; ; ;
Date Published:
Journal Name:
Econometrica
Volume:
89
Issue:
5
ISSN:
0012-9682
Page Range / eLocation ID:
2015 to 2048
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
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