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Menu-choice modeling with interactions and heterogeneous correlated preferences

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  • Kamakura, Wagner A.
  • Kwak, Kyuseop

Abstract

This study focuses on the menus typically found in the marketplace (e.g., restaurants and Internet vendors), where the consumer may choose one or more from dozens of options or menu items, each at a posted price or fee. We show that modeling choices out of the typical menu leads to the “curse of dimensionality,” which transpires in two ways. First, the choice set (all possible menu selections) grows geometrically with the number of items in the menu. Second, the number of interactions among menu items also grows disproportionately to the number of items in the menu. We propose a menu choice model that circumvents these two problems in a feasible and flexible, but parsimonious way.

Suggested Citation

  • Kamakura, Wagner A. & Kwak, Kyuseop, 2020. "Menu-choice modeling with interactions and heterogeneous correlated preferences," Journal of choice modelling, Elsevier, vol. 37(C).
    • Handle: RePEc:eee:eejocm:v:37:y:2020:i:c:s1755534520300130
    DOI: 10.1016/j.jocm.2020.100214
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    References listed on IDEAS

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