Odds supermodularity and the Luce rule

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2023-03-31
Date
2021-03
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Source Title
Games and Economic Behavior
Print ISSN
0899-8256
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Publisher
Academic Press
Volume
126
Issue
Pages
443 - 452
Language
English
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Abstract

We present a characterization of the Luce rule in terms of positivity and a new choice axiom called odds supermodularity that strengthens the regularity axiom. This new characterization illuminates a connection that goes unnoticed, and sheds light on the behavioral underpinnings of the Luce rule and its extensions from a different perspective. We show that odds supermodularity per se characterizes a structured extension of the Luce rule that accommodates zero probability choices. We identify the random choice model characterized via a stochastic counterpart of Plott (1973)'s path independence axiom, which strengthens odds supermodularity.

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