Abstract
We develop a general framework that extends choice models by including an explicit representation of the process and context of decision making. Process refers to the steps involved in decision making. Context refers to factors affecting the process, focusing in this paper on social networks. The extended choice framework includes more behavioral richness through the explicit representation of the planning process preceding an action and its dynamics and the effects of context (family, friends, and market) on the process leading to a choice, as well as the inclusion of new types of subjective data in choice models. We discuss the key issues involved in applying the extended framework, focusing on richer data requirements, theories, and models, and present three partial demonstrations of the proposed framework. Future research challenges include the development of more comprehensive empirical tests of the extended modeling framework.
Similar content being viewed by others
Notes
See Neal (2006) for evidence on these claims.
References
Abou-Zeid, M., & Ben-Akiva, M. (2010). A model of travel happiness and mode switching. In S. Hess, & A. Daly (Eds.), Choice modelling: the state-of-the-art and the state-of-practice. Proceedings from the Inaugural International Choice Modelling Conference. Bingley: Emerald, pp. 289–306.
Akerlof, G., & Kranton, R. (2002). Identity and schooling: some lessons for the economics of education. Journal of Economic Literature, 40, 1167–1201.
Apps, P. F., & Rees, R. (1997). Collective labor supply and household production. Journal of Political Economy, 105, 178–190.
Bass, F. (1969). A new product growth model for consumer durables. Management Science, 15(5), 215–227.
Bateman, I., & Munro, A. (2005). An experiment on risky choice amongst households. The Economic Journal, 115(502), 176–189.
Ben-Akiva, M. (2010). Planning and action in a model of choice. In S. Hess, & A. Daly (Eds.), Choice modelling: the state-of-the-art and the state-of-practice. Proceedings from the Inaugural International Choice Modelling Conference. Bingley: Emerald, pp. 19–34.
Ben-Akiva, M., McFadden, D., Train, K., Walker, J., Bhat, C., Bierlaire, M., et al. (2002). Hybrid choice models: progress and challenges. Marketing Letters, 13(3), 163–175.
Berry, S., Levinsohn, J., & Pakes, A. (1995). Automobile prices in market equilibrium. Econometrica, 63, 841–889.
Berry, S., Levinsohn, J., & Pakes, A. (2004). Differentiated products demand systems from a combination of micro and macro data: the new vehicle market. Journal of Political Economy, 112(1), 68–105.
Blume, L., Brock, W., Durlauf, S., & Ioannides, Y. (2010). Identification of social interactions. In J. Benhabib, A. Bisin, & M. Jackson (Eds.), Handbook of social economics. Amsterdam: North Holland.
Blundell, R. W., Chiappori, P. A., & Meghir, C. (2005). Collective labor supply with children. Journal of Political Economy, 113(6), 1277–1306.
Brock, W., & Durlauf, S. (2001). Discrete choice with social interactions. Review of Economic Studies, 68, 235–260.
Brock, W., & Durlauf, S. (2006). Multinomial choice with social interactions. In L. Blume & S. Durlauf (Eds.), The economy as an evolving complex system III. New York: Oxford University Press.
Browning, M., & Chiappori, P. A. (1998). Efficient intra-household allocation: a general characterization and empirical tests. Econometrica, 66(6), 1241–1278.
Carneiro, P., Heckman, J., & Masterov, D. (2005). Labor market discrimination and racial differences in premarket factors. Journal of Law and Economics, 48, 1–39.
Carrasco, J. A., Hogan, B., Wellman, B., & Miller, E. J. (2006). Collecting social network data to study social activity-travel behavior: an egocentric approach. Paper presented at the 85th Transportation Research Board Meeting, Washington, DC.
Chen, Z., & Woolley, F. (2001). A Cournot–Nash model of family decision making. The Economic Journal, 111, 722–748.
Chiappori, P. A. (1988). Rational household labor supply. Econometrica, 56(1), 63–90.
Chiappori, P. A. (1992). Collective labor supply and welfare. Journal of Political Economy, 100, 437–467.
Chiappori, P. A., & Ekeland, I. (2009). The micro economics of efficient group behavior: identification. Econometrica, 77(3), 763–799.
Coleman, J. S., Katz, E., & Menzel, H. (1966). Medical innovation: a diffusion study. Indianapolis: The Bobbs-Merrill Company.
de Palma, A., Picard, N., & Ziegelmeyer, A. (2011). Individual and couple decision behavior under risk: evidence on the dynamics of power balance. Theory and Decision, 70(1), 45–64.
Delavande, A. (2008). Pill, patch, or shot? Subjective expectations and birth-control choice. International Economic Review, 49, 999–1042.
Fukuda, D., & Morichi, S. (2007). Incorporating aggregate behavior in an individual’s discrete choice: an application to analyzing illegal bicycle parking behavior. Transportation Research Part A, 41, 313–325.
Jackson, M. (2008). Social and economic networks. New York: Oxford University Press.
Kahneman, D., & Tversky, A. (1979). Prospect theory: an analysis of decision under risk. Econometrica, 47(2), 263–291.
Kahneman, D., Wakker, P. P., & Sarin, R. (1997). Back to Bentham? Explorations of experienced utility. Quarterly Journal of Economics, 112(2), 375–405.
Keating, N. L., Ayanian, J. Z., Cleary, P. D., & Marsden, P. V. (2007). Factors affecting influential discussions among physicians: a social network analysis of a primary care practice. Journal of General Internal Medicine, 22(6), 794–798.
Kivetz, R., Netzer, O., & Srinivasan, V. (2004). Alternative models for capturing the compromise effect. Journal of Marketing Research, 41, 237–257.
Manski, C. (1993). Identification of endogenous social effects: the reflection problem. Review of Economic Studies, 60, 531–542.
Manski, C. (2002). Identification of decision rules in experiments on simple games of proposal and response. European Economic Review, 46, 880–891.
Manski, C. (2004). Measuring expectations. Econometrica, 72, 1329–1376.
Manski, C. (2010). When consensus choice dominates individualism: Jensen’s inequality and collective decisions under uncertainty. Quantitative Economics, 1(1), 187–202.
McFadden, D. (1999). Rationality for economists? Journal of Risk and Uncertainty, 19(1–3), 73–105.
Neal, D. (2006). Why has black-white skill convergence stopped? In E. Hanushek & F. Welch (Eds.), Handbook of the economics of education. Amsterdam: North Holland.
Ogbu, J. (2003). Black Americans in an affluent suburb. Mahwah: Lawrence Erlbaum Associates.
Walker, J. L., Ehlers, E., Banerjee, I., & Dugundji, E. R. (2011). Correcting for endogeneity in behavioral choice models with social influence variables. Transportation Research Part A, 45(4), 362–374.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Ben-Akiva, M., de Palma, A., McFadden, D. et al. Process and context in choice models. Mark Lett 23, 439–456 (2012). https://doi.org/10.1007/s11002-012-9180-7
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11002-012-9180-7