Web Appendix for: Attribute-Level Heterogeneity

Management Science, Forthcoming

HEC Paris Research Paper No. MKG-2014-1029

36 Pages Posted: 22 Dec 2013 Last revised: 19 Mar 2014

See all articles by Peter Ebbes

Peter Ebbes

HEC Paris - Marketing

John Liechty

Pennsylvania State University, University Park

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Date Written: December 1, 2013

Abstract

This web appendix has three main purposes. First, we provide a more or less 'stand-alone' technical appendix that describes the estimation algorithm for the proposed attribute model using Markov Chain Monte Carlo techniques (sections A1 and A2). The reversible jump (RJ) algorithm (Green, 1995) is also described in detail for the (vector) finite mixture regression model. We first give a discussion of priors and a general description of the reversible jump algorithm; then we present details of the estimation schema for the standard finite mixture regression model. We subsequently extend these details for the attribute model. As we will show, the algorithms and equations for the attribute model are similar to the results for the vector model due to a simple transformation. This similarity makes the coding of the attribute model straightforward once computer code for the vector model (with reversible jump steps) is developed. Furthermore, we discuss how the algorithms should be modified to estimate a standard choice model (e.g. a probit model). Second, we briefly discuss in section A3 the benchmark models for heterogeneity considered in the main document and their implementation, including the mixture of normals model (Allenby et al. 1998, Lenk and DeSarbo 2000) and the Dirichlet Process Priors (Ansari and Mela 2003, Kim et al. 2004). Third, we present the results of an additional simulation experiment where the traditional (vector) finite mixture model is used to generate the data in section A4, which augments the Monte Carlo experiment in the main document.

The paper "Attribute-Level Heterogeneity" to which these Appendices apply is available at the following URL: http://ssrn.com/abstract=1687107

Keywords: heterogeneity, mixture models, hierarchical Bayes, conjoint analysis, reversible jump MCMC, segmentation

Suggested Citation

Ebbes, Peter and Liechty, John and Grewal, Rajdeep, Web Appendix for: Attribute-Level Heterogeneity (December 1, 2013). Management Science, Forthcoming, HEC Paris Research Paper No. MKG-2014-1029, Available at SSRN: https://ssrn.com/abstract=2370423

Peter Ebbes (Contact Author)

HEC Paris - Marketing ( email )

Paris
France

John Liechty

Pennsylvania State University, University Park ( email )

University Park
State College, PA 16802
United States

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

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