Estimating Heterogeneous EBA and Economic Screening Rule Choice Models

Consumer choice in surveys and in the marketplace reflects a complex process of screening and evaluating choice alternatives. Behavioral and economic models of choice processes are difficult to estimate when using stated and revealed preferences because the underlying process is latent. This paper introduces Bayesian methods for estimating two behavioral models that eliminate alternatives using specific attribute-levels. The elimination by aspects theory postulates a sequential elimination of alternatives by attribute levels until a single one, the chosen alternative remains. In the economic screening rule model, respondents screen out alternatives with certain attribute levels, and then choose from the remaining alternatives using a compensatory function of all the attributes. The economic screening rule model gives an economic justification as to why certain attributes are used to screen alternatives. A commercial conjoint study is used to illustrate the methods and assess their performance. In this dataset, the economic screening rule model outperforms the EBA and other standard choice models.