Abstract

http://ssrn.com/abstract=1939109
 
 

References (24)



 
 

Citations (1)



 


 



Choice Models for Budgeted Demand and Constrained Allocation


Takuya Satomura


Keio University - Faculty of Business and Commerce

Jeff D. Brazell


The Modellers, LLC

Greg M. Allenby


Ohio State University (OSU) - Department of Marketing and Logistics

October 5, 2011

Fisher College of Business Working Paper No. 1939109

Abstract:     
Utility maximization is implicit in models of consumer choice, learning, forward-looking behavior and substitution. It is a central feature of models of market competition built on the aggregation of individual choices, and is assumed in nearly all quantitative models of behavior. Yet, while the assumption of utility maximization is widely present in marketing analysis, it is rarely expressed in a way that constrains the choices that are made. Constrained utility maximization leads to richer tradeoffs among the choices when budgets and allocations are assigned non-trivial roles in the choice process. In this paper we develop alternative models of constrained maximization, and show that models of constrained choice significantly improve the in-sample and predictive fit to the data in two conjoint studies -- a pharmaceutical study of physician drug allocation and a conjoint study of volumetric demand. Inferences about the budget constraint, and extensions to non-conjoint applications, are discussed.

Number of Pages in PDF File: 31

Keywords: Volumetric Demand, Constrained Optimization, Budgeted Choice, Conjoint Analysis

JEL Classification: C33, C35, M31

working papers series





Download This Paper

Date posted: October 5, 2011  

Suggested Citation

Satomura, Takuya and Brazell, Jeff D. and Allenby, Greg M., Choice Models for Budgeted Demand and Constrained Allocation (October 5, 2011). Fisher College of Business Working Paper No. 1939109. Available at SSRN: http://ssrn.com/abstract=1939109 or http://dx.doi.org/10.2139/ssrn.1939109

Contact Information

Takuya Satomura
Keio University - Faculty of Business and Commerce ( email )
2-15-45 Mita
Minato-ku
Tokyo, 108-8345
Japan
Jeff D. Brazell
The Modellers, LLC ( email )
6995 Union Park Center
Ste 300
Salt Lake City, UT 84047
United States
8018846688 (Phone)
HOME PAGE: http://www.themodellers.com
Greg M. Allenby (Contact Author)
Ohio State University (OSU) - Department of Marketing and Logistics ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States

Feedback to SSRN


Paper statistics
Abstract Views: 557
Downloads: 110
Download Rank: 149,149
References:  24
Citations:  1

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.344 seconds