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Type	Working Paper
Scope	Discipline-based scholarship
Title	Identifying the discount factor of forward looking consumers based on consumption from inventory
Organization Unit	Department of Business Administration (Egon Franck) Marketing Management (Selin Akca) Marketing and Market Research (René Algesheimer)
Authors	Selin Akca Thomas Otter
Language	English
Institution	University of Zurich
Series Name	SSRN
Number	2440681
Number of Pages	48
Date	2014
Abstract Text	In this paper we study the identification of discrete choice models of dynamically optimizing consumers. We first provide additional formal results for existing identification solutions. We then investigate the ‘last in, last out’ (LILO) constraint on consuming from the inventory as a means to identifying the discount factor in these models. We find that the LILO constraint (over-)identifies the discount parameter in the absence of assumptions about consumers’ expectations and show how LILO results in efficient estimates in a parametric, maximum likelihood framework using simulated data. Finally, we report survey based empirical evidence for the relevance of LILO strategies in four different categories.
Free access at	Related URL
Digital Object Identifier	http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2440681
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