Risk, uncertainty and discrete choice models

Andre de Palma, Moshe Ben Akiva, David Brownestone, Charles Holt, Thierry Magnac, Daniel McFadden, Peter Moffatt, Nathalie Picard, Kenneth Train, Peter Wakker, Joan Walker

Research output: Contribution to journalArticlepeer-review

85 Citations (Scopus)


This paper examines the cross-fertilizations of random utility models with the study of decision making under risk and uncertainty. We start with a description of the expected utility (EU) theory and then consider deviations from the standard EU frameworks, involving the Allais paradox and the Ellsberg paradox, inter alia. We then discuss how the resulting non-EU framework can be modeled and estimated within the framework of discrete choices in static and dynamic contexts. Our objectives in addressing risk and ambiguity in individual choice contexts are to understand the decision choice process and to use behavioral information for prediction, prescription, and policy analysis.
Original languageEnglish
Pages (from-to)269-295
Number of pages27
JournalMarketing Letters
Early online date31 Jul 2008
Publication statusPublished - Dec 2008

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