An Ideal-Point Probabilistic Choice Model for Heterogeneous Preferences

MARKETING SCIENCE Vol. S, No 3, Summer 1986

21 Pages Posted: 26 Apr 2014

See all articles by Wagner A. Kamakura

Wagner A. Kamakura

Rice University

Rajendra K. Srivastava

Singapore Management University - Lee Kong Chian School of Business

Date Written: 1986

Abstract

This paper presents a new ideal point probabilistic choice model. Unlike the model suggested by Cooper and Nakanishi ( 1983) which attempts to capture choices via a single ideal point, the proposed model, though based on aggregate data, allows for heterogeneity m preferences by estimating a distribution of ideal points. The model accounts for substitutability among choice alternatives and alleviates one of the major sources for the violation of the "Independence from Irrelevant Alternatives" property. It is demonstrated that the final form of the model is a Multinomial Probit, with a covariance matrix that depends on the relative position of the choice alternatives. An empirical application is provided and the resulting parameters are compared to the distributions of ideal points and attribute weights obtained via LINMAP (at the individual level) and via both the Logit and Probit versions of the model proposed by Cooper and Nakanishi (at the aggregate level).

Keywords: Choice Models, Multinomial Probit, Consumer Preferences

Suggested Citation

Kamakura, Wagner A. and Srivastava, Rajendra K., An Ideal-Point Probabilistic Choice Model for Heterogeneous Preferences (1986). MARKETING SCIENCE Vol. S, No 3, Summer 1986, Available at SSRN: https://ssrn.com/abstract=2428906

Wagner A. Kamakura (Contact Author)

Rice University ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
(713) 348-6307 (Phone)

Rajendra K. Srivastava

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
3
Abstract Views
254
PlumX Metrics