Empirical Models of Learning Dynamics: A Survey of Recent Developments
54 Pages Posted: 18 Jul 2016
Date Written: July 16, 2016
There is now a very large literature on dynamic models in marketing. In a narrow sense, dynamics can be understood as a mechanism whereby past product purchases affect a person’s current evaluation of the utility he/she will obtain from buying a product. Most of the prior literature has focussed on three mechanisms that may generate such a causal link from past to current purchases: learning, habit persistence, and inventory dynamics. This work has been reviewed extensively in papers by Ching, Erdem and Keane (2013) and Keane (2015). However, dynamics can be more broadly defined as encompassing any process whereby the prior history of a consumer or market affects current utility evaluations. For example, it is clear that, aside from past purchase, a consumer’s perception of a product may be influenced by experiences of friends or other social network members (“social learning”), experience with related products (“correlated learning” or “information spillovers”), examination of publicly available information or expert opinion (“search”), inferences about product attributes that may be drawn from the purchase decisions of others, etc. In the present chapter we focus on the rapidly growing literature that deals with this broader view of dynamics and learning.
Keywords: Social Learning, Correlated Learning, Search and Learning, Heuristic Approach
JEL Classification: C33, C35, C61, D83, D91, M31
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