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A Random-Coefficients Logit Brand-Choice Model Applied to Panel Data

Dipak C. Jain, Naufel J. Vilcassim and Pradeep K. Chintagunta
Journal of Business & Economic Statistics
Vol. 12, No. 3 (Jul., 1994), pp. 317-328
DOI: 10.2307/1392088
Stable URL: http://www.jstor.org/stable/1392088
Page Count: 12
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A Random-Coefficients Logit Brand-Choice Model Applied to Panel Data
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Abstract

A random-coefficients logit model that allows for unobserved heterogeneity in brand preferences and in the responses to marketing variables is empirically investigated using household-level panel data. The unknown underlying distribution of unobserved heterogeneity is approximated by a discrete distribution. The results reveal that there is significant unobserved heterogeneity across households and that ignoring its effects results in a downward bias in the parameter estimates of the marketing variables. It is therefore important to account for heterogeneity in both preferences and responses in the absence of any a priori knowledge about the nature of heterogeneity across households.

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