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The deduction of partial utilities within conjoint analyses is based on the assumption that people maximise their utility (“homo oeconomicus”). This assumption is contradicted by a broad swathe of empirical findings which have demonstrated that people systematically fail to make rational decisions. They nonetheless make predictable errors, so their decisions essentially remain ‘calculable’. Consciously or unconsciously, they simply follow a decision rule that complements utility-maximising choice behaviour. In a first step, we were able to statistically model this sub-optimal choice behaviour, and in a second step we combined both algorithms – the classic utility-maximising choice model and its sub-optimal counterpart – within one “Multi Rule Conjoint Analysis” (MRC) that adaptively models a respondent’s behaviour on the basis of either of these choice models. Overcoming the narrow perspective of rational assumptions, MRC is able to improve predictions by more than 45% compared to standard CBC merely by more extensively exploiting an existing set of data.

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Author(s): Florian Bauer
Date of publication: 26.09.2008
ISBN: 92-831-0224-X
Order Code: CON08
Number of pages: 11
Conference collection: Congress 2008 - Frontiers

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