Choice Models in Marketing: Economic Assumptions, Challenges and Trends

Foundations and Trends in Marketing, Vol. 2, No. 2, 2007

Fisher College of Business Working Paper Series

88 Pages Posted: 5 Feb 2008 Last revised: 12 May 2014

See all articles by Sandeep R. Chandukala

Sandeep R. Chandukala

Indiana University - Kelley School of Business - Department of Marketing

Jaehwan Kim

Korea University Business School (KUBS)

Thomas Otter

Goethe University Frankfurt - Department of Marketing

Peter E. Rossi

University of California, Los Angeles (UCLA) - Anderson School of Management

Greg M. Allenby

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

Date Written: January 1, 2008

Abstract

This monograph provides a review of choice models in marketing from the perspective of a utility maximizing consumer subject to budgetary restrictions. Marketing models of choice have undergone many transformations over the last 20 years, and the advent to hierarchical Bayes models indicate that simple, theoretically grounded models work well when applied to understanding individual choices. Thus, we use economic theory to provide the foundation from which future trends are discussed. We begin our discussion with descriptive models of choice that raises a number of debatable issues for model improvement. We then look to economic theory as a basis for guiding model development, and conclude with a discussion of promising areas for future work.

Keywords: Direct utility models, discrete and continuous choice, Bayesian analysis

JEL Classification: C11, C35, M31

Suggested Citation

Chandukala, Sandeep R. and Kim, Jaehwan and Otter, Thomas and Rossi, Peter E. and Allenby, Greg M., Choice Models in Marketing: Economic Assumptions, Challenges and Trends (January 1, 2008). Foundations and Trends in Marketing, Vol. 2, No. 2, 2007, Fisher College of Business Working Paper Series, Available at SSRN: https://ssrn.com/abstract=1090250

Sandeep R. Chandukala

Indiana University - Kelley School of Business - Department of Marketing ( email )

Kelley School of Business
Bloomington, IN 47405
United States

Jaehwan Kim

Korea University Business School (KUBS) ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea
822.3290.2603 (Phone)
822.922.7220 (Fax)

Thomas Otter

Goethe University Frankfurt - Department of Marketing ( email )

Frankfurt
Germany
++49.69.798.34646 (Phone)

HOME PAGE: http://www.marketing.uni-frankfurt.de/index.php?id=97?&L=1

Peter E. Rossi

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States
773-294-8616 (Phone)

Greg M. Allenby (Contact Author)

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

Fisher Hall 524
2100 Neil Ave
Columbus, OH 43210
United States

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