Dirichlet Multinomial Model

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Dirichlet Multinomial Model

A probability mixture model commonly used to represent patterns of brand choice behavior. Over repeated occasions on which purchases are made from the product category, the set of brands chosen are assumed to follow the multinomial distribution for any given individual. The model also assumes that individuals differ from each other in their set of brand choice probabilities. These probabilities are taken to have a Dirichlet distribution across individuals. The Dirichlet is a parsimonious distribution for the set of brand choice probabilities: for n brands there are n Dirichlet distribution parameters; n - 1 of which indicate the average share of choices for each brand, and the nth indicating the amount of heterogeneity in preference across individuals. The model thus can be used to predict brand choice patterns exhibited over time by a set of individuals (Jeuland, Bass, and Wright 1980; Goodhardt, Ehrenberg, and Chatfield 1984). Source: AMA

See: Beta Binomial Model Brand Choice Models

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