An instrumental variable approach to distinguishing perceptions from preferences for beer brands |
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| Authors: | Trey Malone Jayson L Lusk |
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| Affiliation: | 1. Morrill Hall of Agriculture, Department of Agricultural, Food, and Resource Economics, Michigan State University, East Lansing, MI, USA;2. Department of Agricultural Economics, Purdue University, West Lafayette, IN, USA |
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| Abstract: | Recent developments in behavioral economics have prompted interest in identifying how product perceptions and beliefs influence decision making. Using a branded discrete choice experiment for beer, this article uses the control function approach and plausible instruments to correct for the endogeneity problem in a way that is applicable in a wide range of circumstances. Even after correction, we find that perceptions substantially affect consumer choices. In the context of brand equity for beer brands, we find that the perceived taste and brand familiarity are key determinants of choice. |
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