A Stochastic Multidimensional Scaling Procedure for the Empirical Determination of Convex Indifference Curves for Preference/Choice Analysis

Psychometrika, Volume 56, Issue 2, pp 279-307

29 Pages Posted: 1 Jun 2016

See all articles by Wayne S. DeSarbo

Wayne S. DeSarbo

Pennsylvania State University

Kamel Jedidi

Columbia Business School - Marketing

Joel Steckel

New York University (NYU) - Department of Marketing

Date Written: June 1991

Abstract

The vast majority of existing multidimensional scaling (MDS) procedures devised for the analysis of paired comparison preference/choice judgments are typically based on either scalar product (i.e., vector) or unfolding (i.e., ideal-point) models. Such methods tend to ignore many of the essential components of micro-economic theory including convex indifference curves, constrained utility maximization, demand functions, et cetera. This paper presents a new stochastic MDS procedure called MICROSCALE that attempts to operationalize many of these traditional micro-economic concepts. First, we briefly review several existing MDS models that operate on paired comparisons data, noting the particular nature of the utility functions implied by each class of models. These utility assumptions are then directly contrasted to those of micro-economic theory. The new maximum likelihood based procedure, MICROSCALE, is presented, as well as the technical details of the estimation procedure. The results of a Monte Carlo analysis investigating the performance of the algorithm as a number of model, data, and error factors are experimentally manipulated are provided. Finally, an illustration in consumer psychology concerning a convenience sample of thirty consumers providing paired comparisons judgments for some fourteen brands of over-the-counter analgesics is discussed.

Keywords: multidimensional scaling, paired comparisons data, maximum likelihood estimation, microeconomics, consumer psychology

Suggested Citation

DeSarbo, Wayne S. and Jedidi, Kamel and Steckel, Joel, A Stochastic Multidimensional Scaling Procedure for the Empirical Determination of Convex Indifference Curves for Preference/Choice Analysis (June 1991). Psychometrika, Volume 56, Issue 2, pp 279-307. Available at SSRN: https://ssrn.com/abstract=2787364

Wayne S. DeSarbo (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Kamel Jedidi

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

Joel Steckel

New York University (NYU) - Department of Marketing ( email )

Tisch Hall
40 W 4 St.
New York, NY 10012
United States
2129980521 (Phone)

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