Robust Learning of Consumer Preferences

Abstract

When companies develop new products, there are often competing designs from which to choose to take to market. How to decide? Traditional methods, such as focus groups, do not scale to the modern marketplace in which tastes evolve rapidly. In “Robust Learning of Consumer Preferences,” Feng, Caldentey, and Ryan develop a data-driven approach to deciding which design to produce by displaying a sequence of subsets of possible designs to potential customers. Their framework finds solutions that are robust to any model of consumer choice within a broad family that includes common choice models studied in the literature as special cases. Previous research focuses on algorithms whose performances are tied to a given choice model. Their algorithm is shown to be asymptotically optimal in a worst-case sense. The promising practical performance of the algorithm is demonstrated through a comprehensive numerical study using real data.