FALL 2025

Abstract. 


Abstract. This paper analyzes the value of information for targeting price discounts in shopping applications. It applies methods that combine standard consumer choice models from marketing and economics with matrix factorization techniques from machine learning, whereby users have latent preferences and products have latent attributes, and these are learned from data about consumer choice in a setting where prices vary over time. The paper applies the model to individual panel data from supermarket shopping for a large retailer. The paper analyzes the value of data for increasing profits through personalized price targeting, assessing the relative importance of enriching the model (adding more latent factors) versus more precisely estimating parameters of a fixed model, finding that enriching the model as data grows is an important contributor to improved performance. The paper shows that increasing the length of the history of data used for given set of individuals is substantially more valuable for targeting to those users than adding data about more products or additional users. The results have implications for privacy policy and competition policy.


Abstract.