—On Managerially Efficient Experimental Designs

Olivier Toubia () and John Hauser
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Olivier Toubia: Columbia Business School, Columbia University, 522 Uris Hall, 3022 Broadway, New York, New York 10027

Marketing Science, 2007, vol. 26, issue 6, 851-858

Abstract: In most marketing experiments, managerial decisions are not based directly on the estimates of the parameters but rather on functions of these estimates. For example, many managerial decisions are driven by whether or not a feature is valued more than the price the consumer will be asked to pay. In other cases, some managerial decisions are weighed more heavily than others. The standard measures used to evaluate experimental designs (e.g., -efficiency or -efficiency) do not accommodate these phenomena. We propose alternative “managerial efficiency” criteria (-errors) that are relatively easy to implement. We explore their properties, suggest practical algorithms to decrease errors, and provide illustrative examples. Realistic examples suggest improvements of as much as 30% in managerial efficiency. We close by considering approximations for nonlinear criteria and extensions to choice-based experiments.

Keywords: conjoint analysis; experimental design; product development; efficiency (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:26:y:2007:i:6:p:851-858

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