Building Better Prediction Models for Consumer Choices

As consumers, we are constantly making choices about things like what to eat at a restaurant, what clothing to buy at a store, the type of car we’d like to purchase, and so much more. Savvy producers of such goods look to economists to help estimate what products people want and how demand might shift when factors like price and availability change. For many years, economists have relied on something called the random utility model (RUM)—a fundamental framework for rational decision-making widely used in empirical analysis in economics, marketing, and many other fields—to help predict consumer