A dynamic choice model of hybrid behavior in the attribute-space

Antonio Ladrón de Guevara ()
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Antonio Ladrón de Guevara: https://www.upf.edu/web/econ/faculty/-/asset_publisher/6aWmmXf28uXT/persona/id/3418920

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: This paper presents a dynamic choice model in the attribute space considering rational consumers that discount the future. In light of the evidence of several state-dependence patterns, the model is further extended by considering a utility function that allows for the different types of behavior described in the literature: pure inertia, pure variety seeking and hybrid. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a variety-seeking one, where the consumer buys several products simultane-ously. Under the inverted-U marginal utility assumption, the consumer behaves inertial among the existing brands for several periods, and eventually, once the stationary levels are approached, the consumer turns to a variety-seeking behavior. An empirical analysis is run using a scanner database for fabric softener and significant evidence of hybrid behavior for most attributes is found, which supports the functional form considered in the theory.

Keywords: Consumer choice models; state-dependence models; consumption patterns; variety seeking; hybrid behavior (search for similar items in EconPapers)
JEL-codes: C35 D91 M39 (search for similar items in EconPapers)
Date: 2001-11
New Economics Papers: this item is included in nep-dcm
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