Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/202040
Authors: 
Gutierrez, Federico H.
Year of Publication: 
2019
Series/Report no.: 
GLO Discussion Paper No. 387
Abstract: 
This paper proposes a simple solution to the independence of irrelevant alternatives (IIA) problem in Choo and Siow (2006) model, overcoming what is probably the main limitation of this approach. The solution consists of assuming match-specific rather than choice-specific random preferences. The original marriage matching function gets modified by an adjustment factor that improves its empirical properties. Using the American Community Survey, I show that the new approach yields significantly different results affecting the qualitative conclusions of the analysis. The proposed solution to the IIA problem applies to other settings in which the relative "supply" of choices is observable.
Subjects: 
Independence of irrelevant alternatives
marriage market
transferable utility
JEL: 
J12
J16
J10
Document Type: 
Working Paper

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