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A Two-Stage Disaggregate Attribute Choice Model

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  • Dennis H. Gensch

    (University of Wisconsin—Milwaukee)

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    Abstract

    A two-stage disaggregate attribute choice model is proposed and empirically implemented. The first stage of the model is attribute processing to screen the number of alternatives down to a lesser number. The second stage is brand (alternative) processing which considers the attributes simultaneously while allowing for tradeoffs among the attributes. This two-stage approach is then applied to the same real world data set as two single stage disaggregate models, logit and Maximum-Likelihood-Hierarchical (MLH) which are state of the art models representing the alternative and attribute processing approaches, respectively. The predictive accuracy of the two-stage approach compares favorably to the single stage models. In addition, it seems to offer diagnostic information that can provide managerial insights not found in the output of the single stage model.

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    File URL: http://dx.doi.org/10.1287/mksc.6.3.223
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    Bibliographic Info

    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 6 (1987)
    Issue (Month): 3 ()
    Pages: 223-239

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    Handle: RePEc:inm:ormksc:v:6:y:1987:i:3:p:223-239

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    Related research

    Keywords: choice modeling; hierarchical; brand choice; multistage decisions;

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    Cited by:
    1. Fu, Shengfei & Florkowski, Wojciech J. & Nambiar, Padmanand Madhavan & Resurreccion, Anna V.A. & Chinnan, Manjeet S., 2013. "Household Consumption Characteristics of Cookies: The Case of Uganda," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 142910, Southern Agricultural Economics Association.
    2. Cantillo, Víctor & Amaya, Johanna & Ortúzar, J. de D., 2010. "Thresholds and indifference in stated choice surveys," Transportation Research Part B: Methodological, Elsevier, vol. 44(6), pages 753-763, July.
    3. Beynon, Malcolm, 2002. "DS/AHP method: A mathematical analysis, including an understanding of uncertainty," European Journal of Operational Research, Elsevier, vol. 140(1), pages 148-164, July.
    4. Manrai, Ajay K., 1995. "Mathematical models of brand choice behavior," European Journal of Operational Research, Elsevier, vol. 82(1), pages 1-17, April.
    5. Zhu, Wei & Timmermans, Harry, 2010. "Modeling simplifying information processing strategies in conjoint experiments," Transportation Research Part B: Methodological, Elsevier, vol. 44(6), pages 764-780, July.
    6. Basar, Gözen & Bhat, Chandra, 2004. "A parameterized consideration set model for airport choice: an application to the San Francisco Bay Area," Transportation Research Part B: Methodological, Elsevier, vol. 38(10), pages 889-904, December.
    7. Baltas, George & Doyle, Peter, 2001. "Random utility models in marketing research: a survey," Journal of Business Research, Elsevier, vol. 51(2), pages 115-125, February.
    8. Sigal Kaplan & Yoram Shiftan & Shlomo Bekhor, 2011. "A Semi-Compensatory Residential Choice Model With Flexible Error Structure," ERSA conference papers ersa10p65, European Regional Science Association.
    9. Davies, Antony & Cline, Thomas W., 2005. "A consumer behavior approach to modeling monopolistic competition," Journal of Economic Psychology, Elsevier, vol. 26(6), pages 797-826, December.
    10. Conlon, B.J. & Dellaert, B.G.C. & Soest, A.H.O. van, 2001. "Complexity and Accuracy in Consumer Choice: The Double Benefits of Being the Consistently Better Brand," Discussion Paper 2001-54, Tilburg University, Center for Economic Research.
    11. Araña, Jorge E. & León, Carmelo J. & Hanemann, Michael W., 2008. "Emotions and decision rules in discrete choice experiments for valuing health care programmes for the elderly," Journal of Health Economics, Elsevier, vol. 27(3), pages 753-769, May.
    12. Kaplan, Sigal & Shiftan, Yoram & Bekhor, Shlomo, 2012. "Development and estimation of a semi-compensatory model with a flexible error structure," Transportation Research Part B: Methodological, Elsevier, vol. 46(2), pages 291-304.
    13. Gensch, Dennis H. & Soofi, Ehsan S., 1995. "An information-theoretic two-stage, two-decision rule, choice model," European Journal of Operational Research, Elsevier, vol. 81(2), pages 271-280, March.
    14. Cascetta, Ennio & Papola, Andrea, 2009. "Dominance among alternatives in random utility models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(2), pages 170-179, February.
    15. Morrison, Pamela D. & Roberts, John H., 1998. "Matching Electronic Distribution Channels to Product Characteristics: The Role of Congruence in Consideration Set Formation," Journal of Business Research, Elsevier, vol. 41(3), pages 223-229, March.
    16. Elrod, Terry & Johnson, Richard D. & White, Joan, 2004. "A new integrated model of noncompensatory and compensatory decision strategies," Organizational Behavior and Human Decision Processes, Elsevier, vol. 95(1), pages 1-19, September.
    17. Andrews, Rick L. & Manrai, Ajay K., 1998. "Feature-based elimination: Model and empirical comparison," European Journal of Operational Research, Elsevier, vol. 111(2), pages 248-267, December.

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