Endogeneity in Brand Choice Models

J. Miguel Villas-Boas and Russell S. Winer
Additional contact information
Russell S. Winer: Haas School of Business, University of California at Berkeley, Berkeley, California 94720

Management Science, 1999, vol. 45, issue 10, 1324-1338

Abstract: Applications of random utility models to scanner data have been widely presented in marketing for the last 20 years. One particular problem with these applications is that they have ignored possible correlations between the independent variables in the deterministic component of utility (price, promotion, etc.) and the stochastic component or error term. In fact, marketing-mix variables, such as price, not only affect brand purchasing probabilities but are themselves endogenously set by marketing managers. This work tests whether these endogeneity problems are important enough to warrant consideration when estimating random utility models with scanner panel data. Our results show that not accounting for endogeneity may result in a substantial bias in the parameter estimates.

Keywords: endogeneity; brand choice models; panel data; common demand shocks; limited dependent variables (search for similar items in EconPapers)
Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (211)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.45.10.1324 (application/pdf)

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:inm:ormnsc:v:45:y:1999:i:10:p:1324-1338

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().