Multiple Constraint Choice Models with Corner and Interior Solutions

34 Pages Posted: 16 May 2009 Last revised: 10 Aug 2010

See all articles by Takuya Satomura

Takuya Satomura

Keio University - Faculty of Business and Commerce

Jaehwan Kim

Korea University Business School (KUBS)

Greg M. Allenby

Ohio State University (OSU) - Department of Marketing and Logistics

Date Written: August 10, 2010

Abstract

A choice model based on direct utility maximization subject to an arbitrary number of constraints is developed and applied to conjoint data. The model can accommodate oth corner and interior solutions, and provides insights into the proportion of respondents bound by each constraint. Application to volumetric choice data reveals the majority of respondents make choices consistent with price and quantity restrictions. Estimates based on a single monetary-constraint choice model are shown to lead to biased estimates of the monetary value of attribute-levels.

Keywords: multiple constraints, choice model, corner and interior solutions, quantity restriction

JEL Classification: C11, C25, D1, M31

Suggested Citation

Satomura, Takuya and Kim, Jaehwan and Allenby, Greg M., Multiple Constraint Choice Models with Corner and Interior Solutions (August 10, 2010). Available at SSRN: https://ssrn.com/abstract=1405441 or http://dx.doi.org/10.2139/ssrn.1405441

Takuya Satomura (Contact Author)

Keio University - Faculty of Business and Commerce ( email )

2-15-45 Mita
Minato-ku
Tokyo, 108-8345
Japan

Jaehwan Kim

Korea University Business School (KUBS) ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea
822.3290.2603 (Phone)
822.922.7220 (Fax)

Greg M. Allenby

Ohio State University (OSU) - Department of Marketing and Logistics ( email )

Fisher Hall 524
2100 Neil Ave
Columbus, OH 43210
United States