A Bounded Rationality Model of Information Search and Choice in Preference Measurement

49 Pages Posted: 16 Jan 2015 Last revised: 4 Mar 2015

See all articles by Cathy L. Yang

Cathy L. Yang

HEC Paris - Marketing

Olivier Toubia

Columbia Business School - Marketing

Martijn G. de Jong

Erasmus University Rotterdam (EUR)

Date Written: October 14, 2014

Abstract

It is becoming increasingly easier for researchers and practitioners to collect eye tracking data during online preference measurement tasks. We develop a dynamic discrete choice model of information search and choice under bounded rationality, that we calibrate using a combination of eye-tracking and choice data. Our model extends the directed cognition model of Gabaix et al. (2006) by capturing fatigue, proximity effects, and imperfect memory encoding and by estimating individual-level parameters and partworths within a likelihood-based, hierarchical Bayesian framework. We show that modeling eye movements as the outcome of forward-looking utility maximization improves out-of-sample predictions, enables researchers and practitioners to use shorter questionnaires, and allows better discrimination between attributes.

Keywords: Preference Measurement, Eye Tracking, Dynamic Discrete Choice Models

JEL Classification: M31, D83

Suggested Citation

Yang, Cathy L. and Toubia, Olivier and de Jong, Martijn G., A Bounded Rationality Model of Information Search and Choice in Preference Measurement (October 14, 2014). Journal of Marketing Research Forthcoming; HEC Paris Research Paper No. MKG-2015-1072; Columbia Business School Research Paper No. 15-12. Available at SSRN: https://ssrn.com/abstract=2549512

Cathy L. Yang

HEC Paris - Marketing ( email )

Paris
France

Olivier Toubia (Contact Author)

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

Martijn G. De Jong

Erasmus University Rotterdam (EUR) ( email )

3000 DR Rotterdam
Zuid-Holland
Netherlands

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