A Stochastic Model of Consumer Behavior and Optimal Advertising

Charles S. Tapiero
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Charles S. Tapiero: The Hebrew University, Jerusalem and the European Institute for Advanced Studies in Management, Brussels

Management Science, 1982, vol. 28, issue 9, 1054-1064

Abstract: A stochastic consumer behavior model is constructed transforming Nicosia's (Nicosia, F. M., 1966. Consumer Decision Processes. Prentice-Hall, Englewood Cliffs, New Jersey.) postulates into probability hypotheses. Nicosia's deterministic model is obtained in the mean evolutions and variance-covariances, defined by a system of linear differential equations obtained. This system, forming together with mean evolutions a closed system of five simultaneous differential equations is studied for stability, to devise optimal communication strategies and for suggesting an estimation technique.

Keywords: dynamic programming: control theory; marketing: advertising/promotion; marketing: buyer behavior (search for similar items in EconPapers)
Date: 1982
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