Weighted choice probability models Example: Labor supply.

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Weighted choice probability models Example: Labor supply

Number of jobs Let m(h) be the number of jobs in the choice set B(h). Although m(h) may also depend on the wage rate, we suppress this in the notation here. The non-market choice consists of one alternative so that m(0)=1.

Max utility under constraints The assumptions made above allow us to derive the probability that an agent will choose a job with hours of work h within the choice set B(h). By well-known results, it follows that if the agent is a utility maximizer, then the probability that job z within the choice set B(h) is chosen, is given by

Choice probability The choice of any job: