Name
Abstract | ||
|---|---|---|
Recent operations management papers model customers as solving multiarmed bandit problems, positing that consumers use a particular heuristic when choosing among suppliers. These papers then analyze the resulting competition among suppliers and mathematically characterize the equilibrium actions. There remains a question, however, as to whether the original customer models on which the analyses are built are reasonable representations of actual consumer choice. In this paper, we empirically investigate how well these choice rules match actual performance as people solve two-armed Bernoulli bandit problems. We find that some of the most analytically tractable models perform best in tests of model fit. We also find that the expected number of consecutive trials of a given supplier is increasing in its expected quality level, with increasing differences, a result consistent with the models' predictions as well as with loyalty effects described in the popular management literature. |
Year | DOI | Venue |
|---|---|---|
2007 | 10.1287/msom.1060.0130 | Manufacturing & Service Operations Management |
Keywords | Field | DocType |
model customer,expected number,expected quality level,bandit experiments,discrete choice,bernoulli bandit problem,model fit,multiarmed bandit problem,simple models,actual performance,choice rule,actual consumer choice,analytically tractable model,discrete choice models,service quality,operations management,discrete choice model | Heuristic,Economics,Choice set,Service quality,Loyalty,Consumer choice,Expected value,Discrete choice,Operations management,Bernoulli's principle | Journal |
Volume | Issue | ISSN |
9 | 4 | 1523-4614 |
Citations | PageRank | References |
11 | 1.14 | 4 |
Authors | ||
3 | ||
Name | Order | Citations | PageRank |
|---|---|---|---|
| Noah Gans | 1 | 613 | 66.60 |
| George Knox | 2 | 15 | 1.55 |
| Rachel Croson | 3 | 115 | 7.93 |