Bayesian methods have become widespread in marketing literature. We review the essence of the Bayesian approach and explain why it is particularly useful for marketing problems. While the appeal of the Bayesian approach has long been noted by researchers, recent developments in computational methods and expanded availability of detailed marketplace data has fueled the growth in application of Bayesian methods in marketing. We emphasize the modularity and flexibility of modern Bayesian approaches. The usefulness of Bayesian methods in situations in which there is limited information about a large number of units or where the information comes from different sources is noted. We include an extensive discussion of open issues and directions for future research.

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Bayesian Statistics and Marketing

OBJECTIVE To establish an indirect immunofluorescent test so as to improve the sensitivity and specificity of examination of antibodies to beta(2)-glycoprotein METHODS Full-length beta(2)GP cDNA was obtained from human hepatocellular cancer cell line HepG2 by RT-PCR and cloned into the mammalian expression vector pEGFP-C1 The recombinant plasmid pEGFP-beta(2)GP was transfected into HEp-2 cells RT-PCR, immunoblotting (IBT), confocal fluorescence microscopy, and indirect immunofluorescent test (IIF) were used to confirm the expression, localization, and antigenicity of fusion protein of green fluorescent protein (GFP) Serum specimens from 19 patients suspected as with secondary antiphospholipid syndrome (APS), 1 patient diagnosed as with primary APS, and 10 normal persons were detected with IIF-IgG-beta(2)GP1, ELISA-IgG-ACL, and ELISA-IgG-beta(2)GP I simultaneously RESULTS (1) The HEp-beta(2)GP I cells thus obtained retained their ability of expression of beta(2)GP-I-GFP for more than ten generations This beta(2)GP-I-GFP showed the antigenicity of beta(2)GP-I with a characteristic feature (2) Seven of the 20 serum specimens from APS patients showed characteristic immunofluorescent pattern No serum specimen from normal persons showed immunofluorescent staining The comparison of results of the three methods showed that the concordance between IIF-IgG-beta(2)GP I and ELISA-IgG-beta(2)GP I was the most perfect (Kappa = 0886) (3) HEp-beta(2)GP I retained the immunofluorescent property of HEp-2 cell CONCLUSION As a new kind of substrate of IIF, beta(2)GP I transfectant can be used to detect anti-beta(2)GP-I antibodies Transfeted HEp-2 cells keep the immunofluorescent property of HEp-2 cells in IFANA test and can be used as substrate for routine IFANA detection

[Expression of fusion proteins in beta(2)GP I gene-transfected HEp-2 cells and its clinical application].

We describe a two-step algorithm for estimating dynamic games under the assumption that behavior is consistent with Markov perfect equilibrium. In the first step, the policy functions and the law of motion for the state variables are estimated. In the second step, the remaining structural parameters are estimated using the optimality conditions for equilibrium. The second step estimator is a simple simulated minimum distance estimator. The algorithm applies to a broad class of models, including industry competition models with both discrete and continuous controls such as the Ericson and Pakes (1995) model. We test the algorithm on a class of dynamic discrete choice models with normally distributed errors and a class of dynamic oligopoly models similar to that of Pakes and McGuire (1994).

/pdf/estimating-dynamic-models-of-imperfect-competition-3ko56auuq6.pdf

Estimating Dynamic Models of Imperfect Competition

This paper outlines recently developed techniques for estimating the primitives needed to empirically analyze equilibrium interactions and their implications in oligopolistic markets. It is divided into an introduction and three sections; a section on estimating demand functions, a section on estimating production functions, and a section on estimating "dynamic" parameters (parameters estimated through their implications on the choice of controls which determine the distribution of future profits). The introduction provides an overview of how these primitives are used in typical I.O. applications, and explains how the individual sections are structured. The topics of the three sections have all been addressed in prior literature. Consequently each section begins with a review of the problems I.O. researchers encountered in using the prior approaches. The sections then continue with a fairly detailed explanation of the recent techniques and their relationship to the problems with the prior approaches. Hopefully the detail is rich enough to enable the reader to actually program up a version of the techniques and use them to analyze data. We conclude each section with a brief discussion of some of the problems with the more recent techniques. Here the emphasis is on when those problems are likely to be particularly important, and on recent research designed to overcome them when they are.

/pdf/econometric-tools-for-analyzing-market-outcomes-3fvu82sra8.pdf

Econometric Tools for Analyzing Market Outcomes

How can price elasticities be identified when agents face optimization frictions such as adjustment costs or inattention? I derive bounds on structural price elasticities that are a function of the observed effect of a price change on demand, the size of the price change, and the degree of frictions. The degree of frictions is measured by the utility losses agents tolerate to deviate from the frictionless optimum. The bounds imply that frictions affect intensive margin elasticities much more than extensive margin elasticities. I apply these bounds to the literature on labor supply. The utility costs of ignoring the tax changes used to identify intensive margin labor supply elasticities are typically less than 1% of earnings. As a result, small frictions can explain the differences between micro and macro elasticities, extensive and intensive margin elasticities, and other disparate findings. Pooling estimates from existing studies, I estimate a Hicksian labor supply elasticity of 0.33 on the intensive margin and 0.25 on the extensive margin after accounting for frictions.

/pdf/bounds-on-elasticities-with-optimization-frictions-a-3lszjd1bxj.pdf

Bounds on Elasticities With Optimization Frictions: A Synthesis of Micro and Macro Evidence on Labor Supply

We solve and estimate a dynamic model that allows agents to optimally choose their labor hours and consumption and that allows for both human capital accumulation and savings. Estimation results and simulation exercises indicate that the intertemporal elasticity of substitution is much higher than the conventional estimates and the downward bias comes from the omission of the human capital accumulation effect. The human capital accumulation effect renders the life-cycle path of the shadow wage relatively flat, even though wages increase with age. Hence, a rather flat life-cycle labor supply path can be reconciled with a high intertemporal elasticity of substitution.

Intertemporal Labor Supply and Human Capital Accumulation

We develop a model of household demand for frequently purchased consumer goods that are branded, storable and subject to stochastic price fluctuations. Our framework accounts for how inventories and expectations of future prices affect current period purchase decisions. We estimate our model using scanner data for the ketchup category. Our results indicate that price expectations and the nature of the price process have important effects on demand elasticities. Long-run cross price elasticities of demand are more than twice as great as short-run cross price elasticities. Temporary price cuts (or “deals”) primarily generate purchase acceleration and category expansion, rather than brand switching.

https://mpra.ub.uni-muenchen.de/52516/1/MPRA_paper_52516.pdf

Brand and Quantity Choice Dynamics Under Price Uncertainty

We develop a model of household demand for frequently purchased consumer goods that are branded, storable and subject to stochastic price fluctuations. Our framework accounts for how inventories and expectations of future prices affect current period purchase decisions. We estimate our model using scanner data for the ketchup category. Our results indicate that price expectations and the nature of the price process have important effects on demand elasticities. Long-run cross price elasticities of demand are more than twice as great as short-run cross price elasticities. Temporary price cuts (or ‘‘deals’’) primarily generate purchase acceleration and category expansion, rather than brand switching.

We propose a new methodology for structural estimation of infinite horizon dynamic discrete choice models. We combine the dynamic programming (DP) solution algorithm with the Bayesian Markov chain Monte Carlo algorithm into a single algorithm that solves the DP problem and estimates the parameters simultaneously. As a result, the computational burden of estimating a dynamic model becomes comparable to that of a static model. Another feature of our algorithm is that even though the number of grid points on the state variable is small per solution-estimation iteration, the number of effective grid points increases with the number of estimation iterations. This is how we help ease the “curse of dimensionality.” We simulate and estimate several versions of a simple model of entry and exit to illustrate our methodology. We also prove that under standard conditions, the parameters converge in probability to the true posterior distribution, regardless of the starting values.

/pdf/bayesian-estimation-of-dynamic-discrete-choice-models-3xc00rmrdu.pdf

Susumu Imai

Papers

Intertemporal Labor Supply and Human Capital Accumulation

Intertemporal Labor Supply and Human Capital Accumulation

Brand and Quantity Choice Dynamics Under Price Uncertainty

Brand and Quantity Choice Dynamics Under Price Uncertainty

Bayesian Estimation of Dynamic Discrete Choice Models