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Multiple-Constraint Choice Models with Corner and Interior Solutions

  • Takuya Satomura

    ()

    (Faculty of Business and Commerce, Keio University, Tokyo 108-8345, Japan)

  • Jaehwan Kim

    ()

    (Korea University Business School, Korea University, Seoul 136-701, Korea)

  • Greg M. Allenby

    ()

    (Fisher College of Business, Ohio State University, Columbus, Ohio 43210)

Registered author(s):

    A choice model based on direct utility maximization subject to an arbitrary number of constraints is developed and applied to conjoint data. The model can accommodate both corner and interior solutions, and it provides insights into the proportion of respondents bound by each constraint. Application to volumetric choice data reveals that the majority of respondents make choices consistent with price and quantity restrictions. Estimates based on a single monetary-constraint choice model are shown to lead to biased estimates of the monetary value of attribute levels.

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    File URL: http://dx.doi.org/10.1287/mksc.1110.0636
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    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 30 (2011)
    Issue (Month): 3 (05-06)
    Pages: 481-490

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    Handle: RePEc:inm:ormksc:v:30:y:2011:i:3:p:481-490
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