Conjunctive Screening in Models of Multiple Discreteness
25 Pages Posted: 29 Apr 2016 Last revised: 1 Apr 2020
Date Written: March 31, 2020
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 a consideration set, then estimates of preference will be too extreme and measures of preference and satiation will be biased. In this paper we develop a model of multiple discreteness, or horizontal variety, with conjunctive screening of the alternatives that remove offers from consideration. We find that conjunctive screening accounts for many of the observed corner solutions in our data and leads to estimates of preference and satiation that differs from traditional, compensatory model estimates. We explore implications for disentangling non-purchase due to consideration set formation using a conjoint data set of frozen pizza purchases.
Keywords: Product attributes, Direct utility, Constraints, Screening rules, Multiple Discreteness, Choice modeling, Conjoint Analysis
JEL Classification: M3, C8, C9
Suggested Citation: Suggested Citation