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A Stochastic Multidimensional Scaling Procedure for the Empirical Determination of Convex Indifference Curves for Preference/Choice Analysis

Published online by Cambridge University Press:  01 January 2025

Wayne S. DeSarbo ,
Kamel Jedidi  and
Joel H. Steckel
Wayne S. DeSarbo*
Affiliation:
Departments of Marketing and Statistics, School of Business, The University of Michigan
Kamel Jedidi
Affiliation:
Graduate School of Business, Columbia University
Joel H. Steckel
Affiliation:
Department of Marketing, Stern School of Business, New York University
*
Requests for reprints should be sent to Wayne S. DeSarbo, Departments of Marketing and Statistics, School of Business, University of Michigan, Ann Arbor, MI 48109-1234.
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Abstract

The vast majority of existing multidimensional scaling (MDS) procedures devised for the analysis of paired comparison preference/choice judgments are typically based on either scalar product (i.e., vector) or unfolding (i.e., ideal-point) models. Such methods tend to ignore many of the essential components of microeconomic theory including convex indifference curves, constrained utility maximization, demand functions, et cetera. This paper presents a new stochastic MDS procedure called MICROSCALE that attempts to operationalize many of these traditional microeconomic concepts. First, we briefly review several existing MDS models that operate on paired comparisons data, noting the particular nature of the utility functions implied by each class of models. These utility assumptions are then directly contrasted to those of microeconomic theory. The new maximum likelihood based procedure, MICROSCALE, is presented, as well as the technical details of the estimation procedure. The results of a Monte Carlo analysis investigating the performance of the algorithm as a number of model, data, and error factors are experimentally manipulated are provided. Finally, an illustration in consumer psychology concerning a convenience sample of thirty consumers providing paired comparisons judgments for some fourteen brands of over-the-counter analgesics is discussed.

Keywords

multidimensional scalingpaired comparisons datamaximum likelihood estimationmicroeconomicsconsumer psychology
Type
Original Paper
Information
Psychometrika , Volume 56 , Issue 2 , June 1991 , pp. 279 - 307
Copyright
Copyright © 1991 The Psychometric Society

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