Multiple-Constraint Choice Models with Corner and Interior Solutions

Abstract

A choice model based on direct utility maximization subject to an arbitrary number of constraints is developed and applied to conjoint data. The model can accommodate both corner and interior solutions, and it provides insights into the proportion of respondents bound by each constraint. Application to volumetric choice data reveals that the majority of respondents make choices consistent with price and quantity restrictions. Estimates based on a single monetary-constraint choice model are shown to lead to biased estimates of the monetary value of attribute levels.