Choice Models in Marketing: Economic Assumptions, Challenges and Trends

Sandeep R. Chandukala, Jaehwan Kim, Thomas Otter, Peter Rossi () and Greg M. Allenby

Foundations and Trends(R) in Marketing, 2008, vol. 2, issue 2, 97-184

Abstract: Direct utility models of consumer choice are reviewed and developed for understanding consumer preferences. We begin with a review of statistical models of choice, posing a series of modeling challenges that are resolved by considering economic foundations based on constrained utility maximization. Direct utility models differ from other choice models by directly modeling the consumer utility function used to derive the likelihood of the data through Kuhn-Tucker conditions. Recent advances in Bayesian estimation make the estimation of these models computationally feasible, offering advantages in model interpretation over models based on indirect utility, and descriptive models that tend to be highly parameterized. Future trends are discussed in terms of the antecedents and enhancements of utility function specification.

Keywords: Choice models; Econometrics; Marketing research (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:now:fntmkt:1700000008

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