Data and Code for: Random Utility with Unobservable Alternatives

The random utility model (RUM), a cornerstone in economics, is typically<br>studied under the assumption that choice frequencies of all alternatives<br>are observable. In practice, however, some alternatives have unobservable<br>choice frequencies and are commonly aggregated into a single category called<br>an outside option. We study RUM in such environments and derive a finite,<br>nonredundant system of inequality constraints on observed choice frequencies<br>that characterizes RU-rationalizability. We show that the conventional<br>practice of aggregating unobserved alternatives can miss key information<br>leading to incorrect conclusions such as that observed choices are rationalizable,<br>even when no RUM is consistent with them.<br>