Customer-Specific Taste Parameters and Mixed Logit: Households' Choice of Electricity Supplier

David Revelt and Kenneth Train ()
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David Revelt: University of California, Berkeley

Econometrics from EconWPA

Abstract: In a discrete choice situation, information about the tastes of each sampled customer is inferred from estimates of the distribution of tastes in the population. First, maximum likelihood procedures are used to estimate the distribution of tastes in the population using the pooled data for all sampled customers. Then, the distribution of tastes of each sampled customer is derived conditional on the observed data for that customer and the estimated population distribution of tastes (accounting for uncertainty in the population estimates.) We apply the method to data on residential customers' choice among energy suppliers in conjoint-type experiments. The estimated distribution of tastes provides practical information that is useful for suppliers in designing their offers. The conditioning for individual customers is found to differentiate customers effectively for marketing purposes and to improve considerably the predictions in new situations.

JEL-codes: C25 D12 L94 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm
Date: 2001-01-02
Note: 31 pages Acrobat .pdf
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Working Paper: Customer-Specific Taste Parameters and Mixed Logit: Households' Choice of Electricity Supplier (2000)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpem:0012001

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