Nontransitive Preferences and Stochastic Rationalizability: A Behavioral Equivalence
Theoretical Economics
2023-05-01 v1
Abstract
Nontransitive choices have long been an area of curiosity within economics. However, determining whether nontransitive choices represent an individual's preference is a difficult task since choice data is inherently stochastic. This paper shows that behavior from nontransitive preferences under a monotonicity assumption is equivalent to a transitive stochastic choice model. In particular, nontransitive preferences are regularly interpreted as a strength of preference, so we assume alternatives are chosen proportionally to the nontransitive preference. One implication of this result is that one cannot distinguish ``complementarity in attention" and ``complementarity in demand."
Cite
@article{arxiv.2304.14631,
title = {Nontransitive Preferences and Stochastic Rationalizability: A Behavioral Equivalence},
author = {Mogens Fosgerau and John Rehbeck},
journal= {arXiv preprint arXiv:2304.14631},
year = {2023}
}