Modeling the psychological effects in marketing with randam

Abstract

This document indicates that the psychological effects which was inconsistent with utility maximization occurs using the Generalized Nested Logit (GNL) model which is one of the models consistent with (random) utility maximization. First, I define the attraction effect and the compromise effect confused among is Simonson (1989), Simonson and Tversky (1992), and Roe et al. (2001). Second, I argue these effects occur with the GNL model under the definitions which were defined in the above. The last, I show some interesting properties in occurrence of the effects with the GNL model, and discuss what case is easy to occur the compromise effect. The GNL model includes the nested logit model, and hence three effects (the similarity, attraction and compromise effects) can be expressed with only one model altogether.ho