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Dynamic Two Stage Modeling for Category-Level and Brand-Level Purchases Using Potential Outcome Approach With Bayes Inference

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  • Kei Miyazaki
  • Takahiro Hoshino
  • Ulf Böckenholt

Abstract

We propose an econometric two-stage model for category-level purchase and brand-level purchase that allows for simultaneous brand purchases in the analysis of scanner panel data. The proposed model formulation is consistent with the traditional theory of consumer behavior. We conduct Bayesian estimation with the Markov chain Monte Carlo algorithm for our proposed model. The simulation studies show that previously proposed related models can cause severe bias in predicting future brand choices, while the proposed method can effectively predict them. Additionally in a marketing application, the proposed method can examine brand switching behaviors that existing methods cannot. Moreover, we show that the prediction accuracy of the proposed method is higher than that of existing methods.

Suggested Citation

  • Kei Miyazaki & Takahiro Hoshino & Ulf Böckenholt, 2021. "Dynamic Two Stage Modeling for Category-Level and Brand-Level Purchases Using Potential Outcome Approach With Bayes Inference," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 39(3), pages 622-635, July.
  • Handle: RePEc:taf:jnlbes:v:39:y:2021:i:3:p:622-635
    DOI: 10.1080/07350015.2019.1702047
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    Cited by:

    1. Rub'en Loaiza-Maya & Didier Nibbering, 2022. "Fast variational Bayes methods for multinomial probit models," Papers 2202.12495, arXiv.org, revised Oct 2022.
    2. Gael M. Martin & David T. Frazier & Worapree Maneesoonthorn & Ruben Loaiza-Maya & Florian Huber & Gary Koop & John Maheu & Didier Nibbering & Anastasios Panagiotelis, 2022. "Bayesian Forecasting in Economics and Finance: A Modern Review," Papers 2212.03471, arXiv.org, revised Jul 2023.
    3. Gael M. Martin & David T. Frazier & Ruben Loaiza-Maya & Florian Huber & Gary Koop & John Maheu & Didier Nibbering & Anastasios Panagiotelis, 2023. "Bayesian Forecasting in the 21st Century: A Modern Review," Monash Econometrics and Business Statistics Working Papers 1/23, Monash University, Department of Econometrics and Business Statistics.

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