Integrating Routine, Variety Seeking and Compensatory Choice in a Utility Maximizing Framework
AbstractGiven the large number of choices that consumers make each day it seems likely that they will generally adopt decision strategies that minimize cognitive effort, particularly with low price products such as most items found in a supermarket. One such strategy may be to simply choose what has been chosen in the past, i.e. to fall into a pattern of routine choices or decisions. In contrast, there may be preferences for variety in markets for low price, highly differentiated goods. We develop a conceptual and empirical model of routine choice, and the factors that result in transitions to two strategies other than routine selection, to wit, utility maximizing choice among available alternatives and a variety seeking strategy. The empirical approach we employ provides a mechanism for the examination of panel data that avoids the state dependence issues present in most applications to these types of data. We apply this framework to the choice of two food products that illustrate the heterogeneity across types of products in decision strategies and routine choice patterns.
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Bibliographic InfoPaper provided by University of Alberta, Department of Resource Economics and Environmental Sociology in its series Staff Paper Series with number 98687.
Date of creation: 2010
Date of revision:
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Choice modeling; routine behavior; variety‐seeking; panel data; Consumer/Household Economics; Demand and Price Analysis; Institutional and Behavioral Economics; D12; D03; C25;
Find related papers by JEL classification:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-02-05 (Agricultural Economics)
- NEP-ALL-2011-02-05 (All new papers)
- NEP-DCM-2011-02-05 (Discrete Choice Models)
- NEP-EVO-2011-02-05 (Evolutionary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean-Pierre Dubé & Günter J. Hitsch & Peter E. Rossi, 2010.
"State dependence and alternative explanations for consumer inertia,"
RAND Journal of Economics,
RAND Corporation, vol. 41(3), pages 417-445.
- Jean-Pierre Dubé & Günter J. Hitsch & Peter E. Rossi, 2009. "State Dependence and Alternative Explanations for Consumer Inertia," NBER Working Papers 14912, National Bureau of Economic Research, Inc.
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