Essays In Modeling The Consumer Choice Process
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Essays In Modeling The Consumer Choice Process
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Author : Taylor Baldwin Bentley
language : en
Publisher:
Release Date : 2015
Essays In Modeling The Consumer Choice Process written by Taylor Baldwin Bentley and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with Electronic dissertations categories.
In this dissertation, I utilize and develop empirical tools to help academics and practitioners model the consumer's choice process. This collection of three essays strives to answer three main research questions in this theme. In the first paper, I ask: how is the consumer's purchase decision impacted by the search for general product-category information prior to search for their match with a retailer or manufacturer ("sellers")? This paper studies the impact of informational organic keyword search results on the performance of sponsored search advertising. We show that, even though advertisers can target consumers who have specific needs and preferences, for many consumers this is not a sufficient condition for search advertising to work. By allowing consumers to access content that satisfies their information requirements, informational organic results can allow consumers to learn about the product category prior to making their purchase decision. We develop a model characterize the situation in which consumers can search for general information about the product category as well as for information about the individual sellers' offerings. We estimate this model using a unique dataset of search advertising in which commercial websites are restricted in the organic listing, allowing us to identify consumer clicks as informational (from organic links) or purchase oriented (from sponsored links). With the estimation results, we show that consumer welfare is improved by 29%, while advertisers generate 19% more sales, and search engines obtain 18% more paid clicks, as compared to the scenario without informational links. We conduct counterfactuals and find that consumers, advertisers, and the search engine are significantly better off when the search engine provides "free" general information about the product. When the search engine provides information about the advertisers' specific offerings, however, there are fewer paid clicks and advertisers at high ad positions will obtain lower sales. We further investigate the implications on the equilibrium advertiser bidding strategy. Results show that advertiser bids will remain constant in the former scenario. When the search engine provides advertiser information, advertisers will increase their bids because of the increased conversion rate; however, the search engine still loses revenue due to the decreased paid clicks. The findings shed important managerial insights on how to improve the effectiveness of search advertising. In the second paper, I ask: how is the consumer's search for information, during their choice process and in an advertising context, influenced by the signaling theory of advertising? Using a dataset of travel-related keywords obtained from a search engine, we test to what extent consumers are searching and advertisers are bidding in accordance with the signaling theory of advertising in literature. We find significant evidence that consumers are more likely to click on advertisers at higher positions because they infer that such advertisers are more likely to match with their needs. Further, consumers are more likely to find a match with advertisers who have paid more for higher positions. We also find strong evidence that advertisers increase their bids when there is an improvement in the likelihood that their offerings match with consumers' needs, and the improvement cannot be readily observed by consumers prior to searching advertisers' websites. These results are consistent with the predictions from the signaling theory. We test several alternative explanations and show that they cannot fully explain the results. Furthermore, through an extension we find that advertisers can generate more clicks when competing against advertisers with higher match value. We offer an explanation for this finding based on the signaling theory. In the third paper, I ask: can we model the consumer's choice of brand as a sequential elimination of alternatives based on shared or unique aspects while incorporating continuous variables, such as price? With aggregate scanner data, marketing researchers typically estimate the mixed logit model, which accounts for non-IIA substitution patterns among brands, which arise due to similarity and dominance effects in demand. Using numerical examples and analytical illustrations, this research shows that the mixed logit model, which is widely believed to be a highly flexible characterization of brand switching behavior, is not well designed to handle non-IIA substitution patterns. The probit allows only for pair-wise inter-brand similarities, and ignores third-order or higher dependencies. In the presence of similarity and dominance effects, the mixed logit model and the probit model yield systematically distorted marketing mix elasticities. This limits the usefulness of mixed logit and probit for marketing decision-making. We propose a more flexible demand model that is an extension of the elimination-by-aspects (EBA) model (Tversky 1972a, 1972b) to handle marketing variables. The model vastly expands the domain of applicability of the EBA model to aggregate scanner data. Using an analytical closed-form that nests the traditional logit model as a special case, the EBA demand model is estimated with marketing variables from aggregate scanner data in 9 different product categories. It is compared to the mixed logit and probit models on the same datasets. In terms of multiple fit and predictive metrics (LL, BIC, MSE, MAD), the EBA model outperforms the mixed logit and the probit in a majority of categories in terms of both in-sample fit and holdout predictions. The results show significant differences in the estimated price elasticity matrices between the EBA model and the comparison models. In addition, a simulation shows that the retailer can improve gross profits up to 34.4% from pricing based on the EBA model rather than the mixed logit model. Finally, the results suggest that empirical IO researchers, who routinely use mixed logit models as inputs to oligopolistic pricing models, should consider the EBA demand model as the appropriate model of demand for differentiated products.
Two Essays On Consumer Choice
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Author : Rishin Roy
language : en
Publisher:
Release Date : 1990
Two Essays On Consumer Choice written by Rishin Roy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1990 with categories.
Essays On Modeling And Measurement Of Consumers Decision Strategies
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Author : Daria Dzyabura
language : en
Publisher:
Release Date : 2012
Essays On Modeling And Measurement Of Consumers Decision Strategies written by Daria Dzyabura and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
This thesis consists of three related essays which explore new approaches to modeling and measurement of consumer decision strategies. The focus is on decision strategies that deviate from von Neumann-Morgenstern utility theory. Essays 1 and 2 explore decision rules that consumers use to form their consideration sets. Essay 1 proposes disjunctions-of-conjunctions (DOC) decision rules that generalize several well-studied decision models. Two methods are proposed for estimating the model. Consumers' consideration sets for global positioning systems are observed for both calibration and validation data. For the validation data, the cognitively simple DOC-based methods predict better than the ten benchmark methods on an information theoretic measure and on hit rates. The results are robust with respect to format by which consideration is measured, sample, and presentation of profiles. Essay 2 develops and tests an active-machine-learning method to select questions adaptively when consumers use heuristic decision rules. The method tailors priors to each consumer based on a "configurator." Subsequent questions maximize information about the decision heuristics (minimize expected posterior entropy). To update posteriors after each question the posterior is approximated with a variational distribution and uses belief-propagation. The method runs sufficiently fast to select new queries in under a second and provides significantly and substantially more information per question than existing methods based on random, market-based, or orthogonal questions. The algorithm is tested empirically in a web-based survey conducted by an American automotive manufacturer to study vehicle consideration. Adaptive questions outperform market-based questions when estimating heuristic decision rules. Heuristics decision rules predict validation decisions better than compensatory rules. Essay 3 proposes a model of product search when preferences are constructed during the process of search: consumers learn what they like and dislike as they examine products. Product recommendations, whether made by sales people or online recommendation systems, bring products to the consumer's attention and impact his/her preferences. Changing preferences changes the products the consumer will choose to search; at the same time, the products the consumer chooses to search will determine the future shifts in preferences. Accounting for this two-way relationship between products and preferences is critical in optimizing recommendations.
Essays On Empirical Modeling Of The Price Influenced Consumer Decision Making Processes
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Author : Sudipt Roy
language : en
Publisher:
Release Date : 2008
Essays On Empirical Modeling Of The Price Influenced Consumer Decision Making Processes written by Sudipt Roy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
The Role Of Antecedent Volition On Consumer Evaluative Processes And Choice Behavior
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Author : Lianhua Li
language : en
Publisher:
Release Date : 2013
The Role Of Antecedent Volition On Consumer Evaluative Processes And Choice Behavior written by Lianhua Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with Consumer behavior categories.
Antecedent volition, such as participation strategies, goals, mindsets and information processing modes, has been shown to influence consumer evaluative processes and choice in consumer behavior literature. However, these forms of pre-evaluation volition have been ignored in the quantitative modeling of consumer choice. Ignoring them may lead to inaccurate predictions and loss of insight into consumer behavior that might help formulate innovative marketing strategies. This thesis aims to explicitly incorporate antecedent volition into the modeling of consumer decision-making processes. Specifically, I focus on two forms of antecedent volition, participation strategy and goals. Accordingly, this thesis consists of two essays. The first essay examines the possibility that individuals first formulate a strategy on whether to engage in a decision (i.e., is this decision relevant to me?) prior to evaluating presented options. The second essay investigates, assuming volition to engage in a decision, situations in which multiple goals simultaneously guide evaluative processes. In each essay, a new choice model is developed that explicitly incorporates the corresponding form of antecedent volition (participation strategy or goals) into the model specification. Employing these models, I find empirical evidence that both forms of the antecedent volition not only influence but also are influenced by the evaluation of product assortment provided in decision context. It is also found that accounting for these forms of pre-evaluation volition is likely to produce more reliable predictions on willingness to pay for product attribute changes. Other managerial implications about allowing for these forms of antecedent volition are also discussed in the thesis, such as improving targeting, positioning and advertising strategies.
Essays On Basket Level Models Of Consumer Choice
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Author : Andrei Leonidovich Strijnev
language : en
Publisher:
Release Date : 2003
Essays On Basket Level Models Of Consumer Choice written by Andrei Leonidovich Strijnev and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with categories.
Choice Models In Marketing
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Author : Sandeep R. Chandukala
language : en
Publisher: Now Publishers Inc
Release Date : 2008
Choice Models In Marketing written by Sandeep R. Chandukala and has been published by Now Publishers Inc this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Business & Economics categories.
Choice Models in Marketing examines recent developments in the modeling of choice for marketing and reviews a large stream of research currently being developed by both quantitative and qualitative researches in marketing. Choice in marketing differs from other domains in that the choice context is typically very complex, and researchers' desire knowledge of the variables that ultimately lead to demand in marketplace. The marketing choice context is characterized by many choice alternatives. The aim of Choice Models in Marketing is to lay out the foundations of choice models and discuss recent advances. The authors focus on aspects of choice that can be quantitatively modeled and consider models related to a process of constrained utility maximization. By reviewing the basics of choice modeling and pointing to new developments, Choice Models in Marketing provides a platform for future research.
Essays On Consumer Choice With Unobserved Choice Sets
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Author : Maura Coughlin
language : en
Publisher:
Release Date : 2020
Essays On Consumer Choice With Unobserved Choice Sets written by Maura Coughlin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
This dissertation consists of three essays that evaluate how consumers make decisions in settings where the researcher may not know the set of alternatives from which observed choices were selected. Many empirical analyses in economics presume the researcher knows the full set of alternatives an individual compared when selecting their most preferred. In practice, this assumption may fail to hold for a variety of reasons. In the first chapter, I introduce the economic setting of unobserved choice sets and consideration sets defining to this work. In the second chapter, my coauthors and I propose a robust method of discrete choice analysis when agents' choice sets are unobserved. Our core model assumes nothing about agents' choice sets apart from their minimum size. Importantly, it leaves unrestricted the dependence, conditional on observables, between agents' choice sets and their preferences. We first establish that the model is partially identified and characterize its sharp identification region. We then apply our theoretical findings to learn about households' risk preferences and choice sets from data on their deductible choices in auto collision insurance. The third chapter evaluates the prescription drug insurance choices of Medicare beneficiaries. I propose an empirical model of demand for prescription drug plans where non-monetary plan attributes stochastically determine the composition of the set of plans that an individual considers, and monetary plan attributes determine the individual's expected utility over contracts in her consideration set. This model reconciles the classic view of insurance contracts as lotteries with purely monetary outcomes with the empirical finding that choice among insurance plans is driven by their non-monetary attributes and financial attributes beyond their impacts on costs. I estimate the model using data from Medicare Part D allowing for unobserved heterogeneity in risk aversion and in consideration sets. I find that the latter plays a crucial role in plan choices, and in contrast to previous literature that assumes full consideration of all plans, I uncover an important role for risk aversion in determining individual choices.
Essays On Nonparametric Analysis Of Behavioral Models Of Consumer Choice
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Author : Abdoul Karim Nchare Fogam
language : en
Publisher:
Release Date : 2019
Essays On Nonparametric Analysis Of Behavioral Models Of Consumer Choice written by Abdoul Karim Nchare Fogam and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
My dissertation provides a nonparametric analysis of behavioral models of consumerchoice theory. I focus especially on identification, prediction, and testing of demandand consumption under minimal assumptions.The first chapter investigates the following question: Do people, over time, buythe same insurance plans subscribe to the same utility services because they preferthose options or because they dont even pay attention to alternatives available?I propose an econometric framework that models consumer inertia with a mixturemodel of inattention: attention is a latent variable known to the consumer but unobservable by the researcher. Inattentive consumers stick with their previous choiceand attentive consumers pick among all alternatives the one that maximizes theirpreferences. This model allows disentangling inattention from other sources of inertia. For that, I rely on an exclusion restriction, some variables affect attention butnot utility. Based on this model, I derive partial identification results and suggestestimation and inference methods for parameters of interest. I then show how theidentified parameters can be used for policy and welfare analysis by providing sharpbounds on the money-metric welfare of attentive consumers.The second chapter establishes an equivalence result between the Dogit model andthe rational inattention model. The Dogit choice model introduced by Gaudry andDagenais (1979) is an extension of the multinomial logit model to allow for captive orinattentive consumers. McFadden (1981) argues that a drawback of the Dogit modelis its inconsistency with the standard random utility framework. I show that whenthe information cost is modeled using a generalized version of the Shannon entropy,the Dogit model is observationally equivalent to a rational inattention model. Thus,the Dogit model can be derived from microfoundations in term of boundedly rationalbehavior.The third chapter studies the impact of increases in SNAP benefits on food expenditure of program participants. Existing literature on the topic has focusedon the average treatment effect without considering heterogeneity in the effect ofSNAP benefit enhancements and changes in the participant population. To addressthese issues, we propose a distributional approach based on a nonparametric quantiledifference-in-differences setting that accounts for changes in the participant population. Using exogenous increases in SNAP benefits due to the American Recoveryand Reinvestment Act of 2009, we find that while participants at the 20th percentileof the distribution of the food expenditure share experienced a 0.71 percentage-pointincrease in food expenditure share, those at the 70th percentile had their food expenditure share increase by 4.89 percentage points.
Modeling Consumer Choice Processes For High Tech Durable Goods
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Author : Judi Ella Strebel
language : en
Publisher:
Release Date : 1997
Modeling Consumer Choice Processes For High Tech Durable Goods written by Judi Ella Strebel and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1997 with categories.