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Probabilistic choice and procedurally bounded rationality. (English) Zbl 1024.91003
Summary: We derive a family of probabilistic choice models, including the multinomial logit model, from a microeconomic model in which the decision maker has to make some effort in order to implement any desired outcome. The disutility of this effort enters the decision maker’s goal function in an additively separable way. A particular disutility function, yielding the multinomial logit as a special case, is characterized axiomatically. The present approach naturally leads to a normalization of the achieved utility with respect to the number of alternatives. The approach also applies to continuum choice sets in Euclidean spaces, and provides a microeconomic foundation for logit-type quantal-response models in game theory.

MSC:
91B06 Decision theory
91B14 Social choice
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