6.23 Extended Framework for Modeling Choice
Behavior

We review the case against the standard model of
rational behavior and discuss the consequences of
various `anomalies' of preference elicitation. A
general theoretical framework that attempts to
disentangle the various psychological elements in
the decision-making process is presented. We then
present a rigorous and general methodology to
model the theoretical framework, explicitly
incorporating psychological factors and their
influences on choices. This theme has long been
deemed necessary by behavioral researchers, but is
often ignored in demand models. The methodology
requires the estimation of an integrated
multi-equation model consisting of a discrete
choice model and the latent variable model system.
We conclude with a research agenda to bring the
theoretical framework into fruition.