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A Threshold Model for Respondent Heterogeneity

22 Pages Posted: 5 Mar 2010  

Sandeep R. Chandukala

Indiana University - Kelley School of Business - Department of Marketing

S. Long-Tolbert

University of Toledo, Marketing and International Business

Greg M. Allenby

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

Date Written: January 2010

Abstract

Continuous models of respondent heterogeneity assume the existence of a response function where variables of interest are continuously related to explanatory variables. In many situations this assumption may not be true. In this paper we propose an approach of modeling respondent heterogeneity that identifies abrupt changes in the distribution of response coefficients around a threshold specification. Our model differs from traditional threshold models by introducing the threshold effect to describe across-unit behavior as opposed to within unit behavior. We illustrate our proposed Bayesian threshold model for survey data from a large national retail bank that examines the effects of service wait times on customer satisfaction. We find evidence of a threshold effect where long in-process wait times are associated with bank branches characterized by weak associations between service quality drivers and overall perceptions of service quality. Branches with wait times below the threshold are found to have much stronger associations.

Keywords: Threshold model, mixture distribution, service wait times, drivers of service quality

JEL Classification: C11, M31

Suggested Citation

Chandukala, Sandeep R. and Long-Tolbert, S. and Allenby, Greg M., A Threshold Model for Respondent Heterogeneity (January 2010). Available at SSRN: https://ssrn.com/abstract=1564305 or http://dx.doi.org/10.2139/ssrn.1564305

Sandeep R. Chandukala

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

Kelley School of Business
Bloomington, IN 47405
United States

S. Long-tolbert

University of Toledo, Marketing and International Business ( email )

Mail Stop 119, HH 3000
Toledo, OH 43606
419-530-2041 (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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