Incorporating biometric data in models of consumer choice

The use of neuro-physiological data in models of consumer choice is gaining popularity. This article presents some of the benefits of using psycho-physiological data in analyzing consumer valuation and choice. Eye-tracking, facial expressions, and electroencephalography (EEG) data were used to construct three non-conventional choice models, namely, eye-tracking, emotion and brain model. The predictive performance of the non-conventional models was compared to a baseline model, which was based entirely on conventional data. While the emotion and brain models proved to be as good as conventional data in explaining and predicting consumer choice, the eye-tracking model generated superior predictions. Moreover, we document a significant increase in predictive power when biometric data from different sources were combined into a mixed model. Finally, we utilize a machine learning technique to sparse the data and enhance out-of-sample prediction, thus showcasing the compatibility of biometric data with well-established statistical and econometric methods.