Choice Models in Marketing: Economic Assumptions, Challenges and Trends

Sandeep R. Chandukala; Jaehwan Kim; Thomas Otter; Peter E. Rossi; Greg M. Allenby

doi:10.1561/1700000008

journal article Sep 02, 2008

Choice Models in Marketing: Economic Assumptions, Challenges and Trends

Sandeep R. Chandukala Jaehwan Kim Thomas Otter Peter E. Rossi Greg M. Allenby

Foundations and Trends® in Marketing Vol. 2 No. 2 pp. 97-184 · Emerald

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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.

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Details

Published: Sep 02, 2008
Vol/Issue: 2(2)
Pages: 97-184

Authors

S

Sandeep R. Chandukala

Kelley School of Business, Indiana University , Bloomington, IN 47405-1701,

J

Jaehwan Kim

Korea University Business School, Korea University ,

T

Thomas Otter

Department of Marketing, Johann Wolfgang Goethe-Universit¨at Frankfurt ,

P

Peter E. Rossi

Graduate School of Business, University of Chicago ,

G

Greg M. Allenby

Fisher College of Business, Ohio State University ,

Cite This Article

Sandeep R. Chandukala, Jaehwan Kim, Thomas Otter, et al. (2008). Choice Models in Marketing: Economic Assumptions, Challenges and Trends. Foundations and Trends® in Marketing, 2(2), 97-184. https://doi.org/10.1561/1700000008

Choice Models in Marketing: Economic Assumptions, Challenges and Trends

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