A Survey of Preference Estimation with Unobserved Choice Set Heterogeneity

Alessandro Iaria, Gregory Crawford, Rachel Griffith

Research output: Contribution to journalArticle (Academic Journal)

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
JournalJournal of Econometrics
Publication statusAccepted/In press - 16 Jan 2020

Keywords

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

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