New article in Quantitative Marketing and Economics

Understanding consumer choices just got a major upgrade. Traditional random utility models have long been the foundation of discrete choice analysis, but they struggle to explain many real-world behaviors—why consumers sometimes ignore key product attributes or form consideration sets.

A new paper in Quantitative Marketing and Economics by Sergey Turlo, Matteo Fina, Johannes Kasinger, Arash Laghaie, and Thomas Otter brings rational inattention theory into the spotlight, offering a more unified way to model consumer decision-making.

 Key insights from the paper:

- The proposed model accounts for how consumers process information selectively and adaptively rather than considering all products and their attributes equally.

- It helps explain many behavioral phenomena that are at odds with the traditional random utility models at once—such as why people focus on brand over price, ignore certain product attributes, or react strongly to changes in the decision context.

- The paper provides a detailed roadmap on how to apply this approach to data, making it accessible for researchers and practitioners alike.

 For marketing analysts, economists, and businesses, this means better predictions of consumer behavior and more effective decision-making strategies.

 - Read the full paper here: [link]