Conjunctive Screening in Models of Multiple Discreteness

40 Pages Posted: 29 Apr 2016 Last revised: 1 Mar 2021

See all articles by Youngju Kim

Youngju Kim

Korea University Business School (KUBS)

Nino Hardt

Ohio State University (OSU) - Fisher College of Business

Jaehwan Kim

Korea University Business School (KUBS)

Greg M. Allenby

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

Date Written: March 31, 2020

Abstract

Consumer demand for products often result in the purchase of multiple goods at the same time. Corner solutions, or the non-purchase of items, occur when consumers have strong preference for some goods that do not satiate and weak preference for other goods. However, if non-purchase arises because a consumer finds particular brands and attributes unacceptable, leading to the formation of consideration sets, then estimates of preference will be too extreme and biased. In this paper, we extend the work on consideration sets and discrete choices to a wider class of models, and develop a model of multiple discreteness with conjunctive screening of the alternatives that remove offerings from consideration.
We propose a new method for consideration set formation that does not require one to specify a partitioned space of the augmented variable, and that can be adapted into any model specification to remove an outcome variable from the model likelihood function. We explore implications for disentangling non-purchase due to consideration set formation using two data sets of ice cream and frozen pizza purchases. The ice cream data, in which responses are both discrete and volumetric, allow us to compare differences in how screening affect purchase incidence versus volumetric demand per incidence. Screening reduces the estimated number of customers with positive demand but leads to an increase in demand for those not screened. In the frozen pizza data, we find that conjunctive screening accounts for many of the observed corner solutions and leads to estimates of preference and satiation that differs from traditional models of multiple-discreteness without screening.

Keywords: Product attributes, Direct utility, Constraints, Screening rules, Multiple Discreteness, Choice modeling, Conjoint Analysis

JEL Classification: M3, C8, C9

Suggested Citation

Kim, Youngju and Hardt, Nino and Kim, Jaehwan and Allenby, Greg M., Conjunctive Screening in Models of Multiple Discreteness (March 31, 2020). Available at SSRN: https://ssrn.com/abstract=2770025 or http://dx.doi.org/10.2139/ssrn.2770025

Youngju Kim

Korea University Business School (KUBS) ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea

Nino Hardt (Contact Author)

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

Jaehwan Kim

Korea University Business School (KUBS) ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea
822.3290.2603 (Phone)
822.922.7220 (Fax)

Greg M. Allenby

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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