Article ID: | iaor20131108 |
Volume: | 59 |
Issue: | 2 |
Start Page Number: | 305 |
End Page Number: | 322 |
Publication Date: | Feb 2013 |
Journal: | Management Science |
Authors: | Farias Vivek F, Shah Devavrat, Jagabathula Srikanth |
Keywords: | forecasting: applications |
Choice models today are ubiquitous across a range of applications in operations and marketing. Real‐world implementations of many of these models face the formidable stumbling block of simply identifying the ‘right’ model of choice to use. Because models of choice are inherently high‐dimensional objects, the typical approach to dealing with this problem is positing, a priori, a parametric model that one believes adequately captures choice behavior. This approach can be substantially suboptimal in scenarios where one cares about using the choice model learned to make fine‐grained predictions; one must contend with the risks of mis‐specification and overfitting/underfitting. Thus motivated, we visit the following problem: For a ‘generic’ model of consumer choice (namely, distributions over preference lists) and a limited amount of data on how consumers actually make decisions (such as marginal information about these distributions), how may one predict revenues from offering a particular assortment of choices? An outcome of our investigation is a