Stochastic Representative Agent

• Authors: Jose Apesteguia.
• BSE Working Paper: 110401 | September 16
• Keywords: representative agent , stochastic choice.
• JEL codes: D0, D7, E1
• representative agent
• stochastic choice.

Consider the aggregation of a collection of individual stochastic behaviors that fit a given stochastic choice model. We say that such a model has a representative agent if their aggregate stochastic behaviour also fits the model. We show that the Luce model and several prominent extensions thereof do not have a representative agent. On the positive side, we show that the random utility model and several domain-specific restrictions thereof do have a representative agent.