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

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Author Info

  • Joel Huber

    (Fuqua School of Business, Duke University)

  • Kenneth Train

    (University of California, Berkeley)

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.

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File URL: http://128.118.178.162/eps/em/papers/0012/0012003.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Econometrics with number 0012003.

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Length: 18 pages
Date of creation: 05 Jan 2001
Date of revision:
Handle: RePEc:wpa:wuwpem:0012003

Note: 18 pages, Acrobat .pdf
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Web page: http://128.118.178.162

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  1. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  2. Allenby, Greg M. & Rossi, Peter E., 1998. "Marketing models of consumer heterogeneity," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 57-78, November.
  3. Peter J. Lenk & Wayne S. DeSarbo & Paul E. Green & Martin R. Young, 1996. "Hierarchical Bayes Conjoint Analysis: Recovery of Partworth Heterogeneity from Reduced Experimental Designs," Marketing Science, INFORMS, vol. 15(2), pages 173-191.
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