A Survey of Preference Estimation with Unobserved Choice Set Heterogeneity

Gregory S Crawford*, Rachel Griffith*, Alessandro Iaria*

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

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Abstract

We provide an introduction to the estimation of discrete choice models when choice sets are heterogeneous and unobserved to the econometrician. We survey the two most popular approaches: “integrating over” and “differencing out” unobserved choice sets. Inspired by Chamberlain (1980)’s original idea of constructing sufficient statistics from observed choices, we introduce the term “sufficient set” to refer to any combination of observed choices that lies within the true but unobserved choice set. The concept of sufficient set helps to unify notation and organize our thinking, to map econometric assumptions onto economic models, and to implement both methods in practice.
Original languageEnglish
Number of pages40
JournalJournal of Econometrics
Early online date6 Aug 2020
DOIs
Publication statusE-pub ahead of print - 6 Aug 2020

Structured keywords

  • ECON Econometrics
  • ECON CEPS Data

Keywords

  • Discrete Choice Models
  • Panel Data
  • Unobserved Choice Sets
  • Unobserved Heterogeneity
  • Sufficient Sets

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