The Measurement Error Random Utility Model
Updated:
This paper introduces the measurement error random utility model (MERUM) as a generalization of the standard random utility model. In the MERUM, we suppose there is “measurement error” on choice probabilities and characterize the model with an ɛ-Axiom of Revealed Stochastic Preference. The MERUM is also expressible by linear inequalities. The linear inequalities allow us to define a natural measure of stochastic choice consistency which finds the minimal measurement error (MME) needed to find a MERUM rationalization.