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The risk function approach to profit maximizing estimation in direct mailing

Author

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  • Muus, Lars
  • Scheer, Hiek van der
  • Wansbeek, Tom

    (Groningen University)

Abstract

When the parameters of the model describing consumers' reaction to a mailing are known, addresses for a future mailing can be selected in a profit-maximizing way. Usually, these parameters are unknown and are to be estimated. Standard estimation are based on a quadratic loss function. In the present context an alternative loss function is suggested by the mailing company's profit function. This leads to different estimators and higher expected profit.

Suggested Citation

  • Muus, Lars & Scheer, Hiek van der & Wansbeek, Tom, 1999. "The risk function approach to profit maximizing estimation in direct mailing," CCSO Working Papers 199914, University of Groningen, CCSO Centre for Economic Research.
    • Handle: RePEc:gro:rugccs:199914
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    File URL: http://irs.ub.rug.nl/ppn/241132738
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    References listed on IDEAS

    as
    1. Blattberg, Robert C & George, Edward I, 1992. "Estimation under Profit-Driven Loss Functions," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(4), pages 437-444, October.
    2. Jan Roelf Bult & Tom Wansbeek, 1995. "Optimal Selection for Direct Mail," Marketing Science, INFORMS, vol. 14(4), pages 378-394.
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