DIFFERENCES IN INDEPENDENCE OF IRRELEVANT ALTERNATIVES AT INDIVIDUAL VS AGGREGATE LEVELS, AND AT SINGLE PAIR VS FULL CHOICE SET

The concept of 'independence of irrelevant alternatives' (IIA) was ori ginally developed at the individual level. Real-world applications of choice modeling in fields such as marketing, transportation, and polit ical science, however, generally occur at the aggregate level. Here, w e investigate the relationship between the IIA assumptions at the two levels, and identify variables moderating this relationship. Specifica lly in this research, we prove that under some particular conditions, validity of the IIA assumption at the individual level leads to validi ty (or violation) of IIA at the aggregate level. Analogous to the abov e, past literature has focused on evaluating IIA violations or otherwi se for a single pair of alternatives. Real-world managers, on the othe r hand, need to look at possible IIA violations between all possible p airs of alternatives in a choice set; this focus on the full choice se t is necessary for making appropriate marketing strategy decisions. In this research, we argue that it is more relevant to focus on the full choice set. We first identify IIA relationships at the single pair le vel, and then build on those findings to identify IIA relationships at the full choice set level. One of the important findings at the full choice set level is that there must exist preference homogeneity or II A is violated at the aggregate level, when there is no violation at th e individual level. (C) 1997 Elsevier Science Ltd.