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Maximum principles applied to a model of consumer brand choice
Author(s) -
Ferreira Josa A. Soeiro
Publication year - 1990
Publication title -
optimal control applications and methods
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 44
eISSN - 1099-1514
pISSN - 0143-2087
DOI - 10.1002/oca.4660110103
Subject(s) - convexity , maximum principle , markov chain , extension (predicate logic) , order (exchange) , mathematical optimization , property (philosophy) , discrete choice , computer science , consumer choice , mathematics , mathematical economics , economics , econometrics , microeconomics , machine learning , philosophy , finance , epistemology , financial economics , programming language , optimal control
This paper presents an application of the maximum principle and the generalized maximum principle (a recent extension of that principle) to a discrete‐time model of consumer choice behaviour. The model includes two brands in a market and uses a non‐stationary first‐order Markov chain. The optimization is carried out by algorithms based on the above mentioned principles. These algorithms are described, and their performances are discussed and compared both with and without fulfilment of the directional convexity property.