Mapping Out Marketing

ENTRY #4     How can you use models in a meaningful way for your market?

Greg Allenby

Helen C. Kurtz Chair in Marketing, Professor of Marketing, Professor of Statistics, Fisher College of Business, Ohio State University

The error term of a model is the catch all for things not modelled correctly, including model misspecification, omitted variables, and errors encountered in recording the data. Regression models include an additive error component that allows the regression model to reconcile any observation, however deviant, to the assumed model structure. The advantage of this is that it is difficult to “break” the regression model. The ...