Limited Choice Sets, Local Price Response, and Implied Measures of Price Competition

1996 ◽  
Vol 33 (2) ◽  
pp. 163-173 ◽  
Author(s):  
Bart J. Bronnenberg ◽  
Wilfried R. Vanhonacker
Keyword(s):  
Price Competition ◽  
Brand Choice ◽  
Price Response ◽  
Price Search ◽  
Choice Sets ◽  
Point Of Purchase ◽  
Choice Decision ◽  
Biased Estimates ◽  
Limited Choice ◽  
Choice Set

It is becoming increasingly evident that a consumer's brand choice decision in low-involvement categories does not involve full search, evaluation, and comparison of price information of all brands available at point of purchase (global price response). The authors propose a two-stage choice process in which the consumer first identifies a subset of brands within the universal set of brands called the choice set and then evaluates only those brands that are in the choice set relative to one another to select a single brand. The authors find that, consistent with reports of the extent of external price search of consumers, response to shelf price variations is limited to the brands in the choice set (local price response). Their results indicate that employing the assumption of global price response may lead to biased estimates of price elasticity and derived measures of clout and vulnerability. To enable a managerially meaningful and useful assessment of a brand's competitive clout and vulnerability, the authors provide a brand-level approach to integrate local price response into the derivation of these measures.

Limited Choice Sets, Local Price Response and Implied Measures of Price Competition

1996 ◽  
Vol 33 (2) ◽  
pp. 163 ◽  
Author(s):  
Bart J. Bronnenberg ◽  
Wilfried R. Vanhonacker
Keyword(s):  
Price Competition ◽  
Price Response ◽  
Choice Sets ◽  
Limited Choice

scholarly journals Scanner Data: New Opportunities for Demand and Competitive Strategy Analysis

1994 ◽  
Vol 23 (2) ◽  
pp. 125-139 ◽  
Author(s):  
Ronald W. Cotterill
Keyword(s):  
Market Power ◽  
Price Competition ◽  
Tacit Collusion ◽  
Scanner Data ◽  
Strategy Analysis ◽  
Price Response ◽  
Oligopoly Model ◽  
Sufficient Detail ◽  
Bertrand Price Competition ◽  
Reaction Equations

This paper reviews prior research by agricultural economists on the demand for food products using scanner data. Thereafter, a differentiated product's oligopoly model with Bertrand price competition is developed and used to specify brand level demand and oligopoly price reaction equations. The model has sufficient detail to estimate brand level price elasticities and price response elasticities which in turn can be used to estimate three indices of market power. The first index estimated is the familiar Rothschild Index. The paper develops estimates two new indexes, the observed index and the Chamberlin quotient for tacit collusion. It concludes with comments on how the proposed method for the measurement of market power in a differentiated oligopoly can be improved.

scholarly journals Route and Path Choices of Freight Vehicles: A Case Study with Floating Car Data

2020 ◽  
Vol 12 (20) ◽  
pp. 8557
Author(s):  
Antonello Ignazio Croce ◽  
Giuseppe Musolino ◽  
Corrado Rindone ◽  
Antonino Vitetta
Keyword(s):  
Decision Process ◽  
Choice Model ◽  
Road Transport ◽  
Path Selection ◽  
Commercial Vehicles ◽  
Routing Problem ◽  
Floating Car Data ◽  
Choice Decision ◽  
Definition Of ◽  
Choice Set

According to the literature, the path choice decision process of a user of a (road) transport network, named path choice problem (PCP), is composed of two levels/models: the definition of perceived alternative paths (choice set) and the choice of one path in the path choice set. The path choice probability can be estimated with two models: a choice model of the path choice set and a choice model of a path (Mansky paradigm). In this research, the paper’s contribution concerns two elements: extension of the PCP paradigm (two-level models) consolidated in the literature to the route choice decision process (vehicle routing problem (VRP)) and identification of common elements in the PCP and VRP concerning the criteria in the two decision levels and the procedure for route and path selection and choice. The experiment concerns the comparison of observed routes with simulated and optimized routes of commercial vehicles to analyse the level of similarity and coverage. The observed routes are extracted from floating car data (FCD) from commercial vehicles travelling inside a study area inside the Calabria Region (Southern Italy). The comparison is executed in terms of similarity of the sequences of nodes visited between observed routes and simulated/optimized routes.

Predicting what? The strengths and limitations of a test of persuasive advertising principles

2016 ◽  
Vol 50 (1/2) ◽  
pp. 312-316 ◽  
Author(s):  
Malcolm J. Wright
Keyword(s):  
Memory Retrieval ◽  
Brand Choice ◽  
Major Advance ◽  
Contextual Cues ◽  
Content Type ◽  
Persuasive Advertising ◽  
Point Of Purchase ◽  
Consumer Memory ◽  
Random Fluctuations ◽  
With Memory

Purpose – The purpose of this paper is to discuss Armstrong et al.’s (2016) finding that ads that more closely follow evidence-based persuasion principles also achieve higher day-after-recall. Design/methodology/approach – The author evaluates the importance of Armstrong et al.’s result and considers the criticisms that their work only examines some aspects of persuasion and that their dependent variable is known to have a low correlation with sales. Findings – Armstrong et al.’s result provides a major advance in the knowledge of persuasive advertising. While they do not examine all aspects of persuasion, the scope of their tests is still very extensive. Day-after-recall is also arguably a better measure of advertising effectiveness than sales impact, due to the difficulty of identifying small sales changes among the random fluctuations that constantly occur in most markets and given the known processes by which consumer memory operates. Originality/value – By synthesising prior work on advertising and consumer memory, the author provides a simple model of how advertising interacts with memory. This model explains why ad recall ought to be poorly correlated with sales, and highlights the need for Armstrong et al.’s result to be followed by further research into how contextual cues at the point of purchase affect memory retrieval and brand choice.

Measuring Dissent in Electoral Authoritarian Societies

2011 ◽  
Vol 44 (11) ◽  
pp. 1557-1583 ◽  
Author(s):  
Erik S. Herron
Keyword(s):  
Authoritarian Regimes ◽  
Internal Politics ◽  
Citizen Preferences ◽  
Authoritarian Elections ◽  
Limited Choice ◽  
Local Levels ◽  
Choice Set

Although authoritarian regimes assert control over electoral processes, election returns can yield valuable information about dissent. Using election data from two votes in Azerbaijan, this article assesses hypotheses about the sources of antiregime results. The analysis indicates that dissenting votes may be produced by a combination of elite interference at the national and local levels, and through the expression of citizen preferences under the conditions of a limited choice set. Although results must be interpreted with care, authoritarian elections may provide useful insights into hidden elite conflict and/or citizen grievances. The approach to assessing dissenting votes described in the article not only yields information about Azerbaijan’s internal politics but also could be applied to elections in other electoral authoritarian states.

Design of Discrete Choice Experiments

2019 ◽  
Author(s):  
Deborah J. Street ◽  
Rosalie Viney
Keyword(s):  
Discrete Choice ◽  
Choice Experiment ◽  
Stated Preference ◽  
Choice Experiments ◽  
Individual Characteristics ◽  
Discrete Choice Experiments ◽  
Random Component ◽  
Choice Sets ◽  
Attribute Levels ◽  
Choice Set

Discrete choice experiments are a popular stated preference tool in health economics and have been used to address policy questions, establish consumer preferences for health and healthcare, and value health states, among other applications. They are particularly useful when revealed preference data are not available. Most commonly in choice experiments respondents are presented with a situation in which a choice must be made and with a a set of possible options. The options are described by a number of attributes, each of which takes a particular level for each option. The set of possible options is called a “choice set,” and a set of choice sets comprises the choice experiment. The attributes and levels are chosen by the analyst to allow modeling of the underlying preferences of respondents. Respondents are assumed to make utility-maximizing decisions, and the goal of the choice experiment is to estimate how the attribute levels affect the utility of the individual. Utility is assumed to have a systematic component (related to the attributes and levels) and a random component (which may relate to unobserved determinants of utility, individual characteristics or random variation in choices), and an assumption must be made about the distribution of the random component. The structure of the set of choice sets, from the universe of possible choice sets represented by the attributes and levels, that is shown to respondents determines which models can be fitted to the observed choice data and how accurately the effect of the attribute levels can be estimated. Important structural issues include the number of options in each choice set and whether or not options in the same choice set have common attribute levels. Two broad approaches to constructing the set of choice sets that make up a DCE exist—theoretical and algorithmic—and no consensus exists about which approach consistently delivers better designs, although simulation studies and in-field comparisons of designs constructed by both approaches exist.

Electronic Information Systems for Consumers: An Evaluation of Computer-Assisted Formats in Multiple Decision Environments

1993 ◽  
Vol 30 (2) ◽  
pp. 125-141 ◽  
Author(s):  
Robert E. Widing ◽  
W. Wayne Talarzyk
Keyword(s):  
Information Systems ◽  
Decision Quality ◽  
Computer Assisted ◽  
Electronic Information ◽  
Choice Sets ◽  
Decision Environments ◽  
Choice Set

The performance of three formats in three choice sets was studied. In choice sets with negatively correlated attributes, the computer-assisted LINEAR format led to superior decisions in comparison with a computer-assisted CUTOFF format and a simple RAN DOM-order format. Decision quality, however, was high and the same across the formats in a choice set with non-negatively correlated attributes. The LINEAR format was highly regarded by subjects, resulted in timely decisions, and is recommended on the basis of its performance in the study.

The Normalization of Consumer Valuations: Context-Dependent Preferences From Neurobiological Constraints

2020 ◽  
Author(s):  
Ryan Webb ◽  
Paul W. Glimcher ◽  
Kenway Louie
Keyword(s):  
Decision Making ◽  
Discrete Choice ◽  
Choice Model ◽  
Judgment And Decision Making ◽  
Choice Behaviour ◽  
Divisive Normalization ◽  
Choice Sets ◽  
Observed Behaviour ◽  
The Brain ◽  
Choice Set

Consumer valuations are shaped by choice sets, exemplified by patterns of substitution between alternatives as choice sets are varied. Building on recent neuroeconomic evidence that valuations are transformed during the choice process, we incorporate the canonical divisive normalization computation into a discrete choice model and characterize how choice behaviour depends on both size and composition of the choice set. We then examine evidence for such behaviour from two choice experiments that vary the size and composition of the choice set. We find that divisive normalization more accurately captures observed behaviour than alternative models, including an example range normalization model. These results are robust across experimental paradigms. Finally, we demonstrate that Divisive Normalization implements an efficient means for the brain to represent valuations given neurobiological constraints, yielding the fewest choice errors possible given those constraints. This paper was accepted by Elke Weber, judgment and decision making.

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