Choice Behavior Under Time-Variant Quality

Abstract

In past studies of consumer loyalty changes in brand attributes over time were generally unobservable and treated as additional model parameters. In this study we consider ski resorts, for which observable quality attributes change frequently. Using a repeated-purchase model with observed time-variant brand attributes, indicators for state dependence, and individual heterogeneity, we show that purchase history and time-variant site characteristics have a significant and offsetting effect on repurchase decisions. This suggests a third category of consumer along with habit formers and variety seekers, the “play-it-by-ear” type, who, unaffected by purchase history, moves across brands in pursuit of high quality.