Assortment Optimization Under Consider-Then-Choose Choice Models
Name
MS-Static.pdf
Description
Accepted version
Size
1.14 MB
Format
Adobe PDF
Checksum (MD5)
0d8be36ac0c37542f205861e48277641
Author(s)
Aouad, Ali
Farias, Vivek
Levi, Retsef
Date Issued
2020
Journal
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Version
Author's final manuscript
Abstract
Consider-then-choose models, borne out by empirical literature in marketing and psychology, explain that customers choose among alternatives in two phases, by first screening products to decide which alternatives to consider and then ranking them. In this paper, we develop a dynamic programming framework to study the computational aspects of assortment optimization under consider-then-choose premises. Although nonparametric choice models generally lead to computationally intractable assortment optimization problems, we are able to show that for many empirically vetted assumptions on how customers consider and choose, our resulting dynamic program is efficient. Our approach unifies and subsumes several specialized settings analyzed in previous literature. Empirically, we demonstrate the predictive power of our modeling approach on a combination of synthetic and real industry data sets, where prediction errors are significantly reduced against common parametric choice models. In synthetic experiments, our algorithms lead to practical computation schemes that outperform a state-of-the-art integer programming solver in terms of running time, in several parameter regimes of interest. This paper was accepted by Yinyu Ye, optimization.
MIT Department
Massachusetts Institute of Technology. Operations Research Center
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1287/MNSC.2020.3681
