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Control for Heterogeneity June 8, 2007

Posted by jyu in Uncategorized.

Ignoring heterogeneity >> biased and inconsistent estimates of the effects of marketing mix variables on brand choice 

Three ways in marketing literature:

1.  Past purchase or brand choice behavior (Guadagni and Little 1983)

2. Fixed effects — include a household-specific fixed or constant term (Chamberlain 1980)

3. Random effects — assumed the fixed term varies across household according to some probability distribution (Chintagunta 1991 and Gonul and Srinivasan 1993)



1. vc - June 8, 2007

you should also note how to control for observed & unobserved heterogeneity – the first method is of the first type and second & third are for the second type.

(see i can also comment on your notes. welcome to WEB 2.0 – totally cool)

2. yuchaoyingjoan - June 8, 2007

hum…didn’t know that one…Thanks…Professor V

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