A Latent Class Binomial Logit Methodology for the Analysis of Paired Comparison Choice Data: An Application Reinvestigating the Determinants of Perceived Risk

Decision Sciences, Volume 24, Issue 6, pages 1157–1170, 1993

Posted: 9 Jun 2016

See all articles by Michel Wedel

Michel Wedel

University of Maryland - Robert H. Smith School of Business, Marketing Department; University of Groningen - Faculty of Economics and Business

Wayne S. DeSarbo

Pennsylvania State University

Date Written: December 1, 1993

Abstract

A latent class model for identifying classes of subjects in paired comparison choice experiments is developed. The model simultaneously estimates a probabilistic classification of subjects and the logit models' coefficients relating characteristics of objects to choices for each respective group among two alternatives in paired comparison experiments. A modest Monte Carlo analysis of algorithm performance is presented. The proposed model is illustrated with empirical data from a consumer psychology experiment that examines the determinants of perceived consumer risk. The predictive validity of the method is assessed and compared to that of several other procedures. The sensitivity of the method to (randomly) eliminate comparisons, which is important in view of reducing respondent fatigue in the task, is investigated.

Keywords: Market Segmentation, Risk & Uncertainty, Statistical Techniques

Suggested Citation

Wedel, Michel and DeSarbo, Wayne S., A Latent Class Binomial Logit Methodology for the Analysis of Paired Comparison Choice Data: An Application Reinvestigating the Determinants of Perceived Risk (December 1, 1993). Decision Sciences, Volume 24, Issue 6, pages 1157–1170, 1993. Available at SSRN: https://ssrn.com/abstract=2789642

Michel Wedel

University of Maryland - Robert H. Smith School of Business, Marketing Department ( email )

College Park, MD 20742
United States
301.405.2162 (Phone)
301.405.0146 (Fax)

HOME PAGE: http://www.rhsmith.umd.edu/marketing/faculty/wedel.html

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Wayne S. DeSarbo (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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