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Formal Choice Models in Marketing

Author

Listed:
  • Marcel L. Corstjens

    (INSEAD, Boulevard de Constance, 77305 Fontainebleau Cedex, France)

  • David A. Gautschi

    (INSEAD, Boulevard de Constance, 77305 Fontainebleau Cedex, France)

Abstract

The paper gives an overview and evaluates the theoretical traditions underlying choice models that are used in marketing. In particular, the emphasis of this essay is on the underlying assumptions, limitations and empirical demands of these choice models. Four fundamental choice models are used as a basis to analyze this complex field; the neoclassical economic theory as extended by Lancaster, the Risk-Preference Theory of Choices under uncertainty, the Strict Utility Theory and the Random Utility Theory. These four choice models and their extensions are compared and contrasted along the three critical steps in the model building process: theory generation, parameterization and estimation.

Suggested Citation

  • Marcel L. Corstjens & David A. Gautschi, 1983. "Formal Choice Models in Marketing," Marketing Science, INFORMS, vol. 2(1), pages 19-56.
    • Handle: RePEc:inm:ormksc:v:2:y:1983:i:1:p:19-56
    DOI: 10.1287/mksc.2.1.19
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    Citations

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    Cited by:

    1. González-Benito, Óscar & Santos-Requejo, Libia, 2002. "A comparison of approaches to exploit budget allocation data in cross-sectional maximum likelihood estimation of multi-attribute choice models," Omega, Elsevier, vol. 30(5), pages 315-324, October.
    2. Hadjinicola, George C. & Kumar, K. Ravi, 2002. "Modeling manufacturing and marketing options in international operations," International Journal of Production Economics, Elsevier, vol. 75(3), pages 287-304, February.
    3. Jérôme Boutang & Michel de Lara, 2016. "Risk Marketing," Working Papers hal-01353821, HAL.
    4. Hruschka, Harald & Fettes, Werner & Probst, Markus, 2004. "Market segmentation by maximum likelihood clustering using choice elasticities," European Journal of Operational Research, Elsevier, vol. 154(3), pages 779-786, May.
    5. Harald Hruschka & Werner Fettes & Markus Probst, 2002. "Die Bewährung von Ankerpreismodellen bei der Erklärung der Markenwahl," Schmalenbach Journal of Business Research, Springer, vol. 54(5), pages 426-441, August.
    6. Chaab, Jafar & Salhab, Rabih & Zaccour, Georges, 2022. "Dynamic pricing and advertising in the presence of strategic consumers and social contagion: A mean-field game approach," Omega, Elsevier, vol. 109(C).
    7. Jörg Peter Heimel & Harald Hruschka & Martin Natter & Alfred Taudes, 1998. "Konnexionistische Kaufakt- und Markenwahlmodelle," Schmalenbach Journal of Business Research, Springer, vol. 50(7), pages 596-613, July.
    8. Hruschka, Harald & Fettes, Werner & Probst, Markus, 2004. "An empirical comparison of the validity of a neural net based multinomial logit choice model to alternative model specifications," European Journal of Operational Research, Elsevier, vol. 159(1), pages 166-180, November.
    9. Hans H. Bauer & Marc Fischer, 2001. "Ein Ansatz zur simultanen Messung von Kannibalisierungs-, substitutiven Konkurrenz- und Neukäufereffekten am Beispiel von line extensions," Schmalenbach Journal of Business Research, Springer, vol. 53(5), pages 455-477, August.
    10. J. C. Moore & H. Raghav Rao & A. B. Whinston, 1997. "Experimental Strategies for Preference Information Acquisition: A Lattice Path Treatment," Group Decision and Negotiation, Springer, vol. 6(2), pages 139-158, March.
    11. Yaping Wang & Kelly McGuire & Jeremy Terbush & Michael Towns & Chris K. Anderson, 2021. "Choice-Based Dynamic Pricing for Vacation Rentals," Interfaces, INFORMS, vol. 51(6), pages 450-462, November.
    12. Krishnamurthi, Lakshman & Raj, S. P. & Sivakumar, K., 1995. "Unique inter-brand effects of price on brand choice," Journal of Business Research, Elsevier, vol. 34(1), pages 47-56, September.
    13. Lal, Pankaj & Wolde, Bernabas & Alavalapati, Janaki & Burli, Pralhad & Munsell, John, 2016. "Forestland owners' willingness to plant pine on non-forested land for woody bioenergy in Virginia," Forest Policy and Economics, Elsevier, vol. 73(C), pages 52-57.

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