Threshold Luce rules
Article [Version of Record]
Publisher(s)Université de Montréal. Département de sciences économiques.
In the late 1950’s, Luce proposed two different theories of imperfect utility discrimination that have had a lasting impact on economics. One model (1956) gave rise to the literature on just noticeable differences while the other (1959) laid the foundations for the literature on discrete choice. In this paper, I present a unified model of imperfect utility discrimination that generalizes Luce’s two models; and addresses the main limitations of each. Surprisingly, choice behavior consistent with this model is characterized by two conditions from Luce’s monograph (1959).