Semiparametric Multinomial Logit Models for Analysing Consumer Choice Behaviour

The multinomial logit model (MNL) is one of the most frequently used statistical models in marketing applications. It allows to relate an unordered categorical response variable, for example representing the choice of a brand, to a vector of covariates such as the price of the brand or variables characterising the consumer. In its classical form, all covariates enter in strictly parametric, linear form into the utility function of the MNL model. In this paper, we introduce semiparametric extensions, where smooth effects of continuous covariates are modelled by penalised splines. A mixed model representation of these penalised splines is employed to obtain estimates of the corresponding smoothing parameters, leading to a fully automated estimation procedure. To validate semiparametric models against parametric models, we utilise proper scoring rules and compare parametric and semiparametric approaches for a number of brand choice data sets

Backwards is the way forward: feedback in the cortical hierarchy predicts the expected future

Clark offers a powerful description of the brain as a prediction machine, which offers progress on two distinct levels. First, on an abstract conceptual level, it provides a unifying framework for perception, action, and cognition (including subdivisions such as attention, expectation, and imagination). Second, hierarchical prediction offers progress on a concrete descriptive level for testing and constraining conceptual elements and mechanisms of predictive coding models (estimation of predictions, prediction errors, and internal models)

Monotonic regression based on Bayesian P-splines: an application to estimating price response functions from store-level scanner data

Generalized additive models have become a widely used instrument for flexible regression analysis. In many practical situations, however, it is desirable to restrict the flexibility of nonparametric estimation in order to accommodate a presumed monotonic relationship between a covariate and the response variable. For example, consumers usually will buy less of a brand if its price increases, and therefore one expects a brand's unit sales to be a decreasing function in own price. We follow a Bayesian approach using penalized B-splines and incorporate the assumption of monotonicity in a natural way by an appropriate specification of the respective prior distributions. We illustrate the methodology in an empirical application modeling demand for a brand of orange juice and show that imposing monotonicity constraints for own- and cross-item price effects improves the predictive validity of the estimated sales response function considerably

Using big data for customer centric marketing

This chapter deliberates on “big data” and provides a short overview of business intelligence and emerging analytics. It underlines the importance of data for customer-centricity in marketing. This contribution contends that businesses ought to engage in marketing automation tools and apply them to create relevant, targeted customer experiences. Today’s business increasingly rely on digital media and mobile technologies as on-demand, real-time marketing has become more personalised than ever. Therefore, companies and brands are striving to nurture fruitful and long lasting relationships with customers. In a nutshell, this chapter explains why companies should recognise the value of data analysis and mobile applications as tools that drive consumer insights and engagement. It suggests that a strategic approach to big data could drive consumer preferences and may also help to improve the organisational performance.peer-reviewe

Big Data Ethics

Big Data ethics involves adherence to the concepts of right and wrong behavior regarding data, especially personal data. Big Data ethics focuses on structured or unstructured data collectors and disseminators. Big Data ethics is supported, at EU level, by extensive documentation, which seeks to find concrete solutions to maximize the value of Big Data without sacrificing fundamental human rights. The European Data Protection Supervisor (EDPS) supports the right to privacy and the right to the protection of personal data in the respect of human dignity. DOI: 10.13140/RG.2.2.30867.4304

The Future of Retail Operations

Retailing consists of all the activities associated with the selling of goods to the final consumer. In this article, we review the research on retail operations published in Manufacturing & Service Operations Research (M&SOM) since 1999. We then discuss the current retail landscape and the new research directions it offers, in which M&SOM can play a prominent role

The role of effective communication and trustworthiness in determining guests’ loyalty

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.This study investigates the role of trustworthiness and effective communication in the development of guests’ loyalty within the hotel sector. We propose and test a conceptual model that differentiates between two types of loyalty: attitudinal and behavioral. As hotels can control and manage how they communicate their desired characteristics to guests, we posit effective communication and a hotel’s trustworthiness as the key concepts in building loyalty. This study reports on the findings of a study based on 322 hotel guests. Data were analyzed using structural equation modeling. The results reveal that implementing effective communication methods leads to a trustworthy image, which in turn has a positive impact on attitudinal and behavioral loyalty. This research provides hotel managers with strategic directions for cultivating guest loyalty

How to Knit Your Own Markov Blanket

Hohwy (Hohwy 2016, Hohwy 2017) argues there is a tension between the free energy principle and leading depictions of mind as embodied, enactive, and extended (so-called ‘EEE1 cognition’). The tension is traced to the importance, in free energy formulations, of a conception of mind and agency that depends upon the presence of a ‘Markov blanket’ demarcating the agent from the surrounding world. In what follows I show that the Markov blanket considerations do not, in fact, lead to the kinds of tension that Hohwy depicts. On the contrary, they actively favour the EEE story. This is because the Markov property, as exemplified in biological agents, picks out neither a unique nor a stationary boundary. It is this multiplicity and mutability– rather than the absence of agent-environment boundaries as such - that EEE cognition celebrates

Making "fetch" happen: The influence of social and linguistic context on nonstandard word growth and decline

In an online community, new words come and go: today's "haha" may be replaced by tomorrow's "lol." Changes in online writing are usually studied as a social process, with innovations diffusing through a network of individuals in a speech community. But unlike other types of innovation, language change is shaped and constrained by the system in which it takes part. To investigate the links between social and structural factors in language change, we undertake a large-scale analysis of nonstandard word growth in the online community Reddit. We find that dissemination across many linguistic contexts is a sign of growth: words that appear in more linguistic contexts grow faster and survive longer. We also find that social dissemination likely plays a less important role in explaining word growth and decline than previously hypothesized