Choice Models in Marketing: Economic Assumptions, Challenges and Trends
Foundations and Trends in Marketing, Vol. 2, No. 2, 2007
88 Pages Posted: 5 Feb 2008 Last revised: 12 May 2014
Date Written: January 1, 2008
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: Suggested Citation