Faculty of Economics and Business Administration Publications Database

Investigating Endogeneity Bias in Marketing

Qing, Liu
Allenby, Greg M.
Volume: 26
Number: 5
Pages: 642 - 652
Month: September/October
ISSN-Print: 0732-2399
Link External Source: Online Version
Year: 2007
Keywords: Likelihood principle; Adaptive design; Bayes theorem; Directed acyclic graphs
Abstract: The use of adaptive designs in conjoint analysis has been shown to lead to an endogeneity bias in part-worth estimates using sampling experiments. In this paper, we re-examine the endogeneity issue in light of the likelihood principle. The likelihood principle asserts that all relevant information in the data about model parameters is contained in the likelihood function. We show that, once the data are collected, adhering to the likelihood principle leads to analysis where endogeneity becomes ignorable for estimation. The likelihood principle is implicit to Bayesian analysis, and discussion is offered for detecting and dealing with endogeneity bias in marketing.