Working Papers by Kota Saito
# | Title | Authors | Date | Length | Paper | Abstract | |
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1461 | Mixed Logit and Pure Characteristics Models | Lu, Jay Saito, Kota | 02/01/2022 | 38 | sswp1461.pdf | Mixed logit or random coefficients logit models are used extensively in empirical work while pure characteristic models feature in much of theoretical work. We provide a theoretical analysis of the relationship between the two classes of models. First, we show an approximation theorem that precisely characterizes the extent and limitations of mixed logit approximations of pure characteristic models. Second, we present two conditions that highlight novel behavioral differences. The first is a substitutability condition that is satisfied by many pure characteristic models (including models of horizontal differentiation such as Hotelling) but is violated by almost all mixed logit models. The second is a continuity condition that is satisfied by all pure characteristic models but is violated by all mixed logit models. Both conditions pertain to choice patterns when product characteristics change or new products are introduced and illustrate the limitations of using mixed logit models for counterfactual analysis. | |
1449 | Repeated Choice: A Theory of Stochastic Intertemporal Preferences | Saito, Kota Lu, Jay | 01/01/2020 | 80 | sswp1449.pdf | We provide a repeated-choice foundation for stochastic choice. We obtain necessary and sufficient conditions under which an agent's observed stochastic choice can be represented as a limit frequency of optimal choices over time. In our model, the agent repeatedly chooses today's consumption and tomorrow's continuation menu, aware that future preferences will evolve according to a subjective ergodic utility process. Using our model, we demonstrate how not taking into account the intertemporal structure of the problem may lead an analyst to biased estimates of risk preferences. Estimation of preferences can be performed by the analyst without explicitly modeling continuation problems (i.e. stochastic choice is independent of continuation menus) if and only ifthe utility process takes on the standard additive and separable form. Applications include dynamic discrete choice models when agents have non-trivial intertemporal preferences, such as Epstein-Zin preferences. We provide a numerical example which shows the significance of biases caused by ignoring the agent's Epstein-Zin preferences. | |
1441 | Approximate Expected Utility Rationalization | Echenique, Federico Imai, Taisuke Saito, Kota | 06/22/2018 | 52 | sswp1441.pdf | We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty. In a revealed preference setup, and given a positive number e, we provide a characterization of the datasets whose deviation (in beliefs, utility, or perceived prices) is within e of expected utility theory. The number e can then be used as a distance to the theory. We apply our methodology to three recent large-scale experiments. Many subjects in those experiments are consistent with utility aximization, but not expected utility maximization. The correlation of our measure with demographics is also interesting, and provides new and intuitive findings on expected utility. | |
1433 | Axiomatizations of the Mixed Logit Model | Saito, Kota | 09/15/2017 | 43 pages | sswp1433.pdf | A mixed logit function, also known as a random-coefficients logit function, is an integral of logit functions. The mixed logit model is one of the most widely used models in the analysis of discrete choice. Observed behavior is described by a random choice function, which associates with each choice set a probability measure over the choice set. I obtain several necessary and sufficient conditions under which a random choice function becomes a mixed logit function. One condition is easy to interpret and another condition is easy to test. | |
1410 | Response Time and Utility | Echenique, Federico Saito, Kota | 11/17/2015 | 22 | SSWP1410r.pdf | Response time is the time an agent needs to make a decision. One fundamental finding in psychology and neuroscience is that, in a binary choice, the response time is shorter as the difference between the utilities of the two options becomes larger. We consider situations in which utilities are not observed, but rather inferred from revealed preferences: meaning they are inferred from subjects' choices. Given data on subjects' choices, and the time to make those choices, we give conditions on the data that characterize the property that response time is decreasing in utility differences. | |
1409 | Average Choice | Ahn, David Echenique, Federico Saito, Kota | 10/12/2015 | 34 | sswp1409.pdf | This is an investigation of stochastic choice when only the average of the choices is observable. For example when one observes aggregate sales numbers from a store, but not the frequency with which each item was purchased. The focus of our work is on the Luce model, also known as the Logit model. We show that a simple path independence property of average choice uniquely characterizes the Luce model. We also characterize the linear Luce mode, using similar tools. A linear version of the Luce model is used most frequently in empirical work by applied economists. Our characterization is based on the property of path independence, which runs counter to early impossibility results on path independent choice. From an empirical perspective, our results provide a small-sample advantage over the tests of Luce's model that rely on estimating choice frequences. | |
1407 | General Luce Model | Echenique, Federico Saito, Kota | 10/01/2015 | 30 | sswp1407R.pdf | We extend the Luce model of discrete choice theory to satisfactorily handle zero-probability choices. The Luce model (or the Logit model) is the most widely applied and used model in stochastic choice, but it struggles to explain choices that are never made. The Luce model requires that if an alternative y is never chosen when x is available, then there is no set of alternatives from which y is chosen with positive probablity: y cannot be chose, if from sets of alternatives that exclude x. We relax this assumption. In our model, if an alternative y is never chosen when x is available, then we infer that y is dominated by x. While dominted by x, y may still be chosen with positive probability - even with high probability - when grouped with a comparable set of alternatives. | |
1401 | Testable Implications of Translation Invariance and Homotheticity: Variational, Maxmin, Cara and CRRA Preferences | Chambers, Christopher P. Echenique, Federico Saito, Kota | 01/22/2015 | 21 | sswp1401-3.pdf | We provide revealed preference axioms that characterize models of translation invariant preferences. In particular, we characterize the models of variational, maxmin, CARA and CRRA utilities. In each case, we present a revealed preference axiom that is satisfied by a dataset if and only if the data set is consistent from the corresponding utility representation. Our results complement traditional exercies in decision theory that take preferences as primitive. | |
1388 | Testable Implications of Quasi-Hyperbolic and Exponential Time Discounting | Echenique, Federico Saito, Kota Imai, Taisuke | 05/20/2014 | 57 | sswp-1388.pdf | We present the first revealed-preference characterizations of the models of exponential time discounting, quasi-hyperbolic time discounting, and other time-separable models of consumers' intertemporal decisions. The characterizations provide non-parametric revealed-preference tests, which we take to data using the results of a recent experiment conducted by Andreoni and Sprenger (2012). For such data, we find that less than half of the subjects are consistent with exponential discounting, and only a few more are consistent with quasi-hyperbolic discounting. | |
1381 | Testable implications of exponential discounting | Echenique, Federico Saito, Kota | 11/13/2013 | 22 | sswp1381.pdf | ||
1380 | Savage in the Market | Echenique, Federico Saito, Kota | 10/22/2013 | 24 | sswp1380-2.pdf | ||
1379 | The perception-adjusted Luce model | Echenique, Federico Saito, Kota Tserenjigmid, Gerelt | 10/02/2013 | 31 | sswp1379.pdf | ||
1362 | Social preferences under uncertainty: Equality of opportunity vs equality of outcome | Saito, Kota | 04/26/2012 | sswp1362.pdf |