Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments August 8, 2022 erstellt
Beschreibung:
In this paper we propose a hybrid model to study sequential and simultaneous choice behavior in the presence of search cost. After examining all products in an assortment, a rational consumer decides whether to continue searching. Switching from one assortment to another often incurs a search cost that is often related to transportation expense or time. We combine the classic sequential search model with the famous simultaneous discrete choice model, and develop a unified framework to investigate the impact of search cost on the sequential and simultaneous choice behavior. The proposed framework involves a deterministic utility in the discrete choice model under the random utility maximization theory. We consider the associated operations problems including price optimization and competition, assortment planning, search cost management and model estimation. In particular, the prices or markups are product-invariant at optimality for each assortment, and the optimal prices for the products in the first assortment are increasing in search cost while they are decreasing for the products in the second assortment. The assortment optimization problems are generally NP-hard, so we develop efficient heuristics and approximation schemes. Finally, we characterize the likelihood functions, and develop efficient estimation algorithms for complete and incomplete data scenarios. An empirical study shows that the hybrid search and choice model can improve the goodness-of-fit and prediction accuracy for consumer choice, sales and revenue in the shopping scenarios with multiple stores in different locations. Failure to account for the hybrid features of consumer choice and the impact of search cost may lead to substantial losses in operations management. The developed solution approaches are readily applicable in practice