On the Similarity of Classical and Bayesian Estimates of Individual Mean Partworths

Joel Huber and Kenneth Train ()
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Joel Huber: Fuqua School of Business, Duke University

Econometrics from University Library of Munich, Germany

Abstract: An exciting development in modeling has been the ability to estimate reliable individual-level parameters for choice models. Individual partworths derived from these parameters have been very useful in segmentation, identifying extreme individuals, and in creating appropriate choice simulators. In marketing, hierarchical Bayes models have taken the lead in combining information about the aggregate distribution of tastes with the individual's choices to arrive at a conditional estimate of the individual's parameters. In economics, the same behavioral model has been derived from a classical rather than a Bayesian perspective. That is, instead of Gibbs sampling, the method of maximum simulated likelihood provides estimates of both the aggregate and the individual parameters. This paper explores the similarities and differences between classical and Bayesian methods and shows that they result in virtually equivalent conditional estimates of partworths for customers. Thus, the choice between Bayesian and classical estimation becomes one of implementation convenience and philosophical orientation, rather than pragmatic usefulness.

JEL-codes: C11 C13 C15 C25 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2001-01-05
New Economics Papers: this item is included in nep-dcm and nep-ecm
Note: 18 pages, Acrobat .pdf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (122)

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https://econwpa.ub.uni-muenchen.de/econ-wp/em/papers/0012/0012003.pdf (application/pdf)

Related works:
Working Paper: On the Similarity of Classical and Bayesian Estimates of Individual Mean Partworths (2000)
Working Paper: On the Similarity of Classical and Bayesian Estimates of Individual Mean Partworths (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpem:0012003

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