MANAGERIAL DECISION MAKING

D.  Demand Estimation

1.  Methodology

a.  Consumer interviews and surveys

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(1)  Problems

• Sample bias

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• Response bias

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• Response accuracy

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• Cost

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(2)  Controlled experiments

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c.  Controlled market studies

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d.  Uncontrolled market data

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2.  Regression

a.  Model specification

(1)  Linear

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(2)  Constant elasticity

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b.  Data considerations

(1)  Per capita data

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(2)  Real data

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c.  Estimation

Excel => Tools | Data Analysis | Regression

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d.  Regression statistics

(1)  R²

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(2)  Adjusted R²

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(3)  F-statistic

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(4)  t-statistic

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e.  Problems

(1)  Omitted variables

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(2)  Multicollinearity

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(3)  Identification

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(4)  Heteroscedasticity

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(5)  Serial correlation

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Ex. - Estimating movie demand

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