Random regret minimization for consumer choice modeling: Assessment of empirical evidence

Caspar Chorus, Sander van Cranenburgh and Thijs Dekker ()

Journal of Business Research, 2014, vol. 67, issue 11, 2428-2436

Abstract: This paper introduces to the field of marketing a regret-based discrete choice model for the analysis of multi-attribute consumer choices from multinomial choice sets. This random regret minimization (RRM) model, which has recently been introduced in the field of transport, forms a regret-based counterpart of the canonical random utility maximization (RUM) paradigm. This paper assesses empirical results based on 43 comparisons reported in peer-reviewed journal articles and book chapters, with the aim of finding out to what extent, when, and how RRM can form a viable addition to the consumer choice modeler's toolkit. The paper shows that RRM and hybrid RRM–RUM models outperform RUM counterparts in a majority of cases, in terms of model fit and predictive ability. Although differences in performance are quite small, the two paradigms often result in markedly different managerial implications due to considerable differences in, for example, market share forecasts.

Keywords: Random regret minimization; Random utility maximization; Choice modeling; Consumer preferences (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:67:y:2014:i:11:p:2428-2436

DOI: 10.1016/j.jbusres.2014.02.010

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