Multiple Constraint Choice Models with Corner and Interior Solutions
34 Pages Posted: 16 May 2009 Last revised: 10 Aug 2010
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: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data
By Judith A. Chevalier, Anil K. Kashyap, ...
-
Oligopolistic Pricing and the Effects of Aggregate Demand on Economic Activity
-
Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data
By Peter E. Rossi, Judith A. Chevalier, ...
-
A Supergame-Theoretic Model of Business Cycles and Price Wars During Booms
By Julio J. Rotemberg and Garth Saloner
-
Measuring the Implications of Sales and Consumer Inventory Behavior
By Igal Hendel and Aviv Nevo
-
Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?
-
By Igal Hendel and Aviv Nevo
-
By Igal Hendel and Aviv Nevo
-
High-Frequency Substitution and the Measurement of Price Indexes
-
Unanticipated Money and Economic Activity
By Robert J. Barro and Mark Rush