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Removing Heterogeneity Bias from Logit Model Estimation

Author

Listed:
  • J. Morgan Jones

    (University of North Carolina)

  • Jane T. Landwehr

    (New York University)

Abstract

This paper introduces a new estimation procedure for the logit model that is an extension of a conditional estimation procedure developed by Chamberlain (Chamberlain, G. 1978. On the use of panel data. Working paper, Harvard University, 1–52; Chamberlain, G. 1980. Analysis of covariance with qualitative data. 225–238.). The method eliminates heterogeneity bias which is present in the estimates produced by traditional estimation techniques. It improves the goodness of fit and explanatory power of these models, while incorporating purchase event feedback.

Suggested Citation

  • J. Morgan Jones & Jane T. Landwehr, 1988. "Removing Heterogeneity Bias from Logit Model Estimation," Marketing Science, INFORMS, vol. 7(1), pages 41-59.
    • Handle: RePEc:inm:ormksc:v:7:y:1988:i:1:p:41-59
    DOI: 10.1287/mksc.7.1.41
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    Cited by:

    1. Roy, Abhik, 1998. "An error components approach to segmentation and modelling brand choice dynamics," Journal of Economic Psychology, Elsevier, vol. 19(4), pages 463-484, August.
    2. 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.
    3. Patrali Chatterjee & Donna L. Hoffman & Thomas P. Novak, 2003. "Modeling the Clickstream: Implications for Web-Based Advertising Efforts," Marketing Science, INFORMS, vol. 22(4), pages 520-541, May.
    4. Abramson, Charles & Buchmueller, Thomas & Currim, Imran, 1998. "Models of health plan choice," European Journal of Operational Research, Elsevier, vol. 111(2), pages 228-247, December.
    5. Alexander Bleier & Maik Eisenbeiss, 2015. "Personalized Online Advertising Effectiveness: The Interplay of What, When, and Where," Marketing Science, INFORMS, vol. 34(5), pages 669-688, September.
    6. Bart J. Bronnenberg & Jean-Pierre H. Dubé, 2016. "The Formation of Consumer Brand Preferences," NBER Working Papers 22691, National Bureau of Economic Research, Inc.
    7. Wicker, Pamela & Prinz, Joachim & von Hanau, Tassilo, 2012. "Estimating the value of national sporting success," Sport Management Review, Elsevier, vol. 15(2), pages 200-210.
    8. Avi Goldfarb, 2006. "State Dependence at Internet Portals," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 317-352, June.
    9. Bronnenberg, Bart & Dube, Jean-Pierre, 2016. "The Formation of Consumer Brand Preferences," CEPR Discussion Papers 11648, C.E.P.R. Discussion Papers.
    10. Hilger, James & Hanemann, W. Michael, 2008. "The Impact of Water Quality on Southern California Beach Recreation: A Finite Mixture Model Approach," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9v17r715, Department of Agricultural & Resource Economics, UC Berkeley.
    11. Chen, Bo & Saghaian, Sayed, 2017. "Does Consumers’ Preference for Organic Foods Affect Their Store Format Choices?," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252827, Southern Agricultural Economics Association.
    12. Gould, Brian W. & Dong, Diansheng, 2000. "The Decision Of When To Buy A Frequently Purchased Good: A Multi-Period Probit Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-17, December.
    13. Julia Levine & Stephan Seiler, 2023. "Identifying State Dependence in Brand Choice: Evidence from Hurricanes," Marketing Science, INFORMS, vol. 42(5), pages 934-957, September.
    14. Chintagunta, Pradeep & Kyriazidou, Ekaterini & Perktold, Josef, 2001. "Panel data analysis of household brand choices," Journal of Econometrics, Elsevier, vol. 103(1-2), pages 111-153, July.
    15. Martijn G. de Jong & Donald R. Lehmann & Oded Netzer, 2012. "State-Dependence Effects in Surveys," Marketing Science, INFORMS, vol. 31(5), pages 838-854, September.
    16. José M. Labeaga & Mercedes Martos-Partal, 2007. "A Proposal to Distinguish State Dependence and Unobserved Heterogeneity in Binary Brand Choice Models," Working Papers 2007-02, FEDEA.
    17. González-Benito, Óscar, 2004. "Random effects choice models: seeking latent predisposition segments in the context of retail store format selection," Omega, Elsevier, vol. 32(2), pages 167-177, April.
    18. Ulimwengu, John & Sanyal, Prabuddha, 2011. "Joint estimation of farmers' stated willingness to pay for agricultural services:," IFPRI discussion papers 1070, International Food Policy Research Institute (IFPRI).
    19. P. B. Seetharaman, 2004. "Modeling Multiple Sources of State Dependence in Random Utility Models: A Distributed Lag Approach," Marketing Science, INFORMS, vol. 23(2), pages 263-271, April.
    20. Koster, Hans R.A. & van Ommeren, Jos & Rietveld, Piet, 2014. "Estimation of semiparametric sorting models: Explaining geographical concentration of business services," Regional Science and Urban Economics, Elsevier, vol. 44(C), pages 14-28.
    21. Papatla, Purushottam, 1995. "A dynamic model of the advertising-price sensitivity relationship for heterogeneous consumers," Journal of Business Research, Elsevier, vol. 33(3), pages 261-271, July.

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