On the Structure of Behavioral Multistate Duration Models

Abstract

This paper proposes a particular behavioral assumption to characterize the stochastic structure of intertemporal discrete choice models in the absence of state dependence. This assumption extends Luce's axiom; Independence from Irrelevant Alternatives, to the intertemporal context. Under certain regularity conditions the implication of this assumption is that the individual choice process is a Markov chain with transition probabilities that have a particularly simple structure