Choice behavior under time-variant quality: state dependence versus "play-it-by-ear" in selecting ski resorts.

Journal of Business & Economic Statistics, April, 2004 by Klaus Moeltner

In past studies of consumer loyalty changes in brand attributes over time were generally unobservable and treated as additional model parameters. In this study we consider ski resorts, for which observable quality attributes change frequently. Using a repeated-purchase model with observed time-variant brand attributes, indicators for state dependence, and individual heterogeneity, we show that purchase history and time-variant site characteristics have a significant and offsetting effect on repurchase decisions. This suggests a third category of consumer along with habit formers and variety seekers, the "play-it-by-ear" type, who, unaffected by purchase history, mores across brands in pursuit of high quality.

KEY WORDS: Random parameters; Repeated brand choice;...