The Value of Informative Priors in Bayesian Inference with Sparse Data

Lenk, Peter; Orme, Bryan
December 2009
Journal of Marketing Research (JMR);Dec2009, Vol. 46 Issue 6, p832
Academic Journal
Informative priors that reflect the structure of the model can improve estimation when data are sparse, while “standard,” noninformative priors can have unintended consequences. First, the authors discuss selecting informative priors for variances and introduce a conjugate prior for covariance matrices. The proposed prior is more flexible than the inverse Wishart without increasing computations. Second, the authors investigate the impact of priors for the covariance of parameter heterogeneity when the predictor variables are qualitative. Estimates of the omitted effects are spurious with the standard prior. The authors propose an effects prior that treats all effects symmetrically. Third, the authors consider willingness to pay. These ratio estimators magnify uncertainty in the price coefficients and can give unreasonable values for price-insensitive consumers. The authors show that estimation of willingness to pay can be greatly improved by restricting the parameters without distorting them. In all three cases, the standard, noninformative priors perform well for nonsparse data. However, for sparse data, the proposed prior distributions better match the structures of the marketing research problems and improve inferences.


Related Articles

  • A Conjoint Approach for Consumer- and Firm-Level Brand Valuation. Ferjani, Madiha; Jedidi, Kamel; Jagpal, Sharan // Journal of Marketing Research (JMR);Dec2009, Vol. 46 Issue 6, p846 

    This article develops and tests a reduced-form, conjoint methodology for measuring brand equity. The proposed approach (1) provides objective dollar-metric values for brand equity without the need to collect perceptual or brand association data, (2) captures the effects of awareness and...

  • Customer concerns about uncertainty and willingness to pay in leasing solar power systems. Shih, L. H.; Chou, T. Y. // International Journal of Environmental Science & Technology (IJE;Summer2011, Vol. 8 Issue 3, p523 

    Although solar power systems are considered as one of the most promising renewable energy sources, some uncertain factors as well as the high cost could be barriers which create customer resistance. Leasing instead of purchase, as one type of product service system, could be an option to reduce...

  • Threats, institutions and regulations in common pool resources. Whitford, Andrew B. // Policy Sciences;Jun2002, Vol. 35 Issue 2, p125 

    Argues that the ability of bureaucracies to choose appropriate actions can be explained under an alternate model of rational choice under uncertainty. Discussion on the rationality of decision making during catastrophes; Details on reserved rationality, collective choice and common pool...

  • Estimating Household Willingness to Pay for Improved Electricity Supply in Lagos Metropolis. Babawale, G. K.; Awosanya, A. O. // British Journal of Management & Economics;2014, Vol. 4 Issue 5, p672 

    Nigeria's per capita electricity consumption is one of the lowest in Africa; with the residential sector being the worst hit. The supply from the state owned Power Holding Company of Nigeria (PHCN) is often erratic forcing most households to resort to the use of generators with its attendance...

  • Conjoint analysis of consumer preference for bluefin tuna. Ariji, Masahiko // Fisheries Science;Nov2010, Vol. 76 Issue 6, p1023 

    Tuna is one of the most important marine products in Japan, but fishery productivity is decreasing, especially for bluefin tuna ( Thunnus orientalis, Thunnus thynnus) because of strict capture limits implemented by regional fisheries management organizations (RFMOs). Such capture limitations are...

  • Conjoint analysis (simulated trade-off situations).  // A to Z of Management Concepts & Models;5/1/2005, p98 

    The article discusses the concept of conjoint analysis in marketing. It is described as a powerful analytical tool for measuring customer behavior in simulated trade-off situations. It is usually used for customer evaluations of the different attributes of a product and revealed which of these...

  • Investigating how the attributes of live theatre productions influence consumption choices using conjoint analysis: the example of the National Arts Festival, South Africa. Willis, K.; Snowball, J. // Journal of Cultural Economics;Aug2009, Vol. 33 Issue 3, p167 

    While there is a fair amount of work on determinants of demand for the live performing arts, results have often been contradictory with little explanatory power. This may be because of the difficulty in describing the attributes of a performance, particularly in terms of its quality, and the...

  • A Conjoint Model of Quantity Discounts. Iyengar, Raghuram; Jedidi, Kamel // Marketing Science;Mar/Apr2012, Vol. 31 Issue 2, p334 

    Quantity discount pricing is a common practice used by business-to-business and business-to-consumer companies. A key characteristic of quantity discount pricing is that the marginal price declines with higher purchase quantities. In this paper, we propose a choice-based conjoint model for...

  • Are Results from Non-hypothetical Choice-based Conjoint Analyses and Non-hypothetical Recoded-ranking Conjoint Analyses Similar? Akaichi, Faical; Nayga, Rodolfo M.; Gil, José M. // American Journal of Agricultural Economics;Jul2013, Vol. 95 Issue 4, p949 

    Conflicting findings have been found in previous research that compared choice-based conjoint analysis and ranking conjoint analysis in a public good setting. The present paper revisits this issue for a private good in a non-hypothetical context using small and large choice sets. Our results...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics