Consumer choice process for experience goods: An econometric model and analysis

In this research, the authors develop and execute an econometric framework to model and analyze the consumer choice process for experience products fo rmally. The authors develop a multistage model that examines choice and pos tchoice behavior in the context of new movie choices. The modeling framewor k incorporates psychological variables, such as consumer expectations of ch oice set elements and latent product interest, and the influence of informa tion sources, such as critic reviews and word of mouth, within a discrete c hoice formulation. Model estimation allows for the relationship between con sumer choice and postchoice behavior. The authors develop an estimation pro cedure that explicitly accounts for measurement errors in the latent psycho logical variables. In particular, they propose a probit measurement error m odel that provides consistent parameter estimates. Data for the model estim ation are obtained from a laboratory experiment and a field study, The empi rical results provide insights into the role of psychological variables (su ch as consumer expectations and latent product interest) in consumers' choi ce decisions for new movies. The results also identify variables that influ ence consumers' postconsumption evaluations and word of mouth. The model es timation and findings provide both methodological and substantive insights.