Journal Articles

A Threshold Model for Respondent Heterogeneity

2011, Marketing Letters

Sandeep R. Chandukala, Sylvia Long-Tolbert, Greg M. Allenby

Abstract

Continuous models of respondent heterogeneity assume the existence of a response function where variables of interest are continuously related to explanatory variables.  In many situations this assumption may not be true.  In this paper we propose an approach of modeling respondent heterogeneity that identifies abrupt changes in the distribution of response coefficients around a threshold specification.  Our model differs from traditional threshold models by introducing the threshold effect to describe across-unit behavior as opposed to within-unit behavior.  We illustrate our proposed Bayesian threshold model for survey data from a large national retail bank that examines the effects of service wait times on customer satisfaction.  We find evidence of a threshold effect where long in-process wait times are associated with bank branches characterized by weak associations between service quality drivers and overall perceptions of service quality.  Branches with wait times below the threshold are found to have much stronger associations.

Citation

Chandukala, Sandeep R., Sylvia Long-Tolbert, and Greg M. Allenby (2011), "A Threshold Model for Respondent Heterogeneity," Marketing Letters, Vol. 22, No. 2, pp. 133-146.

Notations

Listed on SSRN’s “Top Ten download” in multiple categories, Dec. and April 2010.

Kelley School of Business

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