Search Conferences

Type in any word, words or author name. This searchs through the abstract title, keywords and abstract text and authors. You may search all conferences or just select one conference.


 All Conferences
 EMAC 2019 Annual Conference
 EMAC 2020 Annual Conference
 EMAC 2020 Regional Conference
 EMAC 2021 Annual Conference

EMAC 2021 Annual Conference


Implications of Ignoring the Budget Constraint in Menu-Based Choice
(A2021-94626)

Published: May 25, 2021

AUTHORS

Tetyana Kosyakova, Frankfurt School of Finance & Management; Thomas Otter, Goethe University

ABSTRACT

Ignoring the budget constraint is standard practice in discrete choice models, since the income effect drops out due to the quasi-linear specification of the utility function. In the framework of the menu-based choice, choice of more than one item from a menu is possible. Assuming that individuals can afford every possible combination of offers from a menu of size K, including the one comprised of all K offers, might not be reasonable. In this project, we incorporate the budget constraint into the menu choice model, proposed for the analysis of the data based on choices from a menu by Kosyakova et al. (2020), and demonstrate the implications of ignoring it.