Ellipsoidal Methods for Adaptive Choice-Based Conjoint Analysis
40 Pages Posted: 24 Jun 2016 Last revised: 22 Nov 2017
Date Written: November 21, 2017
Questionnaires for adaptive choice-based conjoint analysis aim at minimizing some measure of the uncer- tainty associated with estimates of preference parameters (e.g. partworths). Bayesian approaches to conjoint analysis quantify this uncertainty with a multivariate distribution that is updated after the respondent answers. Unfortunately, this update often requires multidimensional integration, which effectively reduces the adaptive selection of questions to impractical enumeration. An alternative approach is the polyhedral method by Toubia et al. (2004), which quantifies the uncertainty through a (convex) polyhedron. The approach has a simple geometric interpretation, and allows for quick credibility-region updates and effective optimization-based heuristics for adaptive question-selection. However, its performance deteriorates with high response-error rates. Available adaptations to this method do not preserve all of the geometric sim- plicity and interpretability of the original approach. We show how, by using normal approximations to posterior distributions, one can include response-error in an approximate Bayesian approach that is as intu- itive as the polyhedral approach, and allows the use of effective optimization-based techniques for adaptive question-selection. This ellipsoidal approach extends the effectiveness of the polyhedral approach to the high response-error setting and provides a simple geometric interpretation (from which the method derives its name) of Bayesian approaches. Our results precisely quantify the relationship between the most popular efficiency criterion and heuristic guidelines promoted in extant work. We illustrate the superiority of the ellipsoidal method through extensive numerical experiments.
Keywords: conjoint analysis, geometric methods, Bayesian models, mixed-integer programming
JEL Classification: M31, C11, C13, C61, C90
Suggested Citation: Suggested Citation