Latent Utility and Permutation Invariance : A Revealed Preference Approach

This paper provides partial identification results for latent utility models that satisfy an invariance property on unobservables such as exchangeability. We employ a simple revealed preference argument to "difference out'' unobservables and show that this gives identifying inequalities for utility indices. We show the differencing argument is also useful for counterfactual analysis. The framework generalizes existing work in discrete choice by allowing latent feasibility sets and by allowing individuals to purchase multiple (possibly continuous) goods. In a panel setting, we innovate by allowing preference for variety. We also present a new framework leveraging nesting structures that generalizes nested logit