Choice data generation using usage scenarios and discounted cash flow analysis

Ungki Lee, Namwoo Kang and Ikjin Lee

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

Abstract: Discrete choice analysis is a popular method of estimating heterogeneous customer preferences. Although model accuracy can be increased by including more choice data, this option is untenable when the obtaining of choice data from target customers is costly and time-consuming.. We thus propose a method for choice data generation for commercial products whose expected money value is a key factor in consumer choice (e.g., commercial vehicles and financial product). Using an individual usage scenario, we generate a discounted cash flow (DCF) model instead of a utility model to estimate the discount rates, rather than partworths, of individual consumers. The DCF model helps us generate synthetic choice data from choice sets consisting of various combinations of attribute levels. Using these data, we employ a hierarchical Bayesian (HB) discrete choice analysis. We conclude the study with a case study on the preference estimation of a hybrid courier truck conversion. The results reveal that the DCF-based HB estimation outperforms the traditional HB estimation.

Keywords: Discounted cash flow; Discount rate; Discrete choice analysis; Hierarchical bayesian (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1755534520300476
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eejocm:v:37:y:2020:i:c:s1755534520300476

DOI: 10.1016/j.jocm.2020.100250

Access Statistics for this article

Journal of choice modelling is currently edited by S. Hess and J.M. Rose

More articles in Journal of choice modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().