Interdependences of Products in Market Baskets: Comparing the Conditional Restricted Boltzmann Machine to the Multivariate Logit Model

Hruschka Harald ()
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Hruschka Harald: University of Regensburg Faculty of Business Economics and Management Information Systems, 93053 Regensburg, Germany

Review of Marketing Science, 2021, vol. 19, issue 1, 33-51

Abstract: We analyze market baskets of individual households in two consumer durables categories (music, computer related products) by the multivariate logit (MVL) model, its finite mixture extension (FM-MVL) and the conditional restricted Boltzmann machine (CRBM). The CRBM attains a vastly better out-of-sample performance than MVL and FM-MVL models. Based on simulation-based likelihood ratio tests we prefer the CRBM to the FM-MVL model. To interpret hidden variables of conditional Boltzmann machines we look at their average probability differences between purchase and non-purchases of any sub-category across all baskets. To measure interdependences we compute cross effects between sub-categories for the best performing FM-MVL model and CRBM. In both product categories the CRBM indicates more or higher positive cross effects than the FM-MVL model. Finally, we suggest appropriate future research based on larger and more detailed data sets.

Keywords: machine learning; market basket analysis; multivariate logit model; restricted Boltzmann machine (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/roms-2020-0074

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