'Zero' Option in Conjoint Analysis: A New Specification of the Indecision and the Refusal - Application to the Video on Demand Market

Abstract

This paper undertakes a study about the "zero" option in conjoint analysis. The "zero" option relates to the no choice of products presented to individuals within the frame of a survey. This no choice embeds two distinct concepts, the refusal and the conflict. The first represents the inappreciation of products, while the second is defined by the preference and choice uncertainty. This work proposes a new econometric specification of the no choice by assuming a mix of utilities maximisation and ordered response models. This mix only associates utilities with products and compares them to the "zero" option thresholds. These comparisons lead to no choice situations without linking utilities to refusal and conflict. A study on the Video on Demand market has been conducted. The results are obtained by applying a bayesian approach in the case of individual models, and the maximum likelihood in the case of aggregate models. The estimates fit the reality and the significance of the refusal and the conflict demonstrates the importance of these variables in the decision making process.

Keywords: "zero" option specification, inappreciation of the products, indecision in the choice, separation and non convergence, bayesian approach, Monte Carlo simulations, market shares

JEL Classification: C11, C13, C15, C25, C51, C90, M31