Menu-choice modeling with interactions and heterogeneous correlated preferences

Wagner A. Kamakura and Kyuseop Kwak

Journal of choice modelling, 2020, vol. 37, issue C

Abstract: This study focuses on the menus typically found in the marketplace (e.g., restaurants and Internet vendors), where the consumer may choose one or more from dozens of options or menu items, each at a posted price or fee. We show that modeling choices out of the typical menu leads to the “curse of dimensionality,” which transpires in two ways. First, the choice set (all possible menu selections) grows geometrically with the number of items in the menu. Second, the number of interactions among menu items also grows disproportionately to the number of items in the menu. We propose a menu choice model that circumvents these two problems in a feasible and flexible, but parsimonious way.

Keywords: Menu choice; Auto-logistic model; Optimal pricing (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eejocm:v:37:y:2020:i:c:s1755534520300130

DOI: 10.1016/j.jocm.2020.100214

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