Short Run Needs and Long Term Goals: A Dynamic Model of Thirst Management

Guofang Huang (guofang.huang@yale.edu), Ahmed Khwaja (ahmed.khwaja@yale.edu) and K. Sudhir (k.sudhir@yale.edu)
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Guofang Huang: School of Management, Yale University
Ahmed Khwaja: School of Management, Yale University
K. Sudhir: School of Management, Yale University

No 1856, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Beverage consumption occurs many times a day in response to a variety of needs that change throughout the day. In making their choices, consumers self-regulate their consumption by managing short run needs (e.g., hydration and mood pickup) with long-term goals (e.g., health). Using unique intra-day beverage consumption, activity and psychological needs data, we develop and estimate a model of high frequency consumption choices that accounts for both intra-day changes in short run needs and individual level unobserved heterogeneity in the degree of self-regulation. A novel feature of the model is that it allows for dynamics of consumption and stockpiling at the level of product attributes. The model is used to evaluate introduction of new products in the beverage category and gain insight into the linkage between self-regulation and excess consumption. Broadly, the modeling framework of balancing short run needs with long-term goals has wide ranging applications in choices where long term effects are gradual (e.g., nutrition, exercise, smoking and preventive health care).

Keywords: Dynamic discrete choice; EM algorithm; Self-regulation; Stockpiling; Health care; Needs; Goals; Obesity; Beverages; New product introductions (search for similar items in EconPapers)
Pages: 48 pages
Date: 2012-03
New Economics Papers: this item is included in nep-dcm
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Citations: View citations in EconPapers (1)

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