A state-dependent model of hybrid behavior with rational consumers in the attribute space

This paper presents a dynamic choice model in the attribute space considering rational consumers. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a varietyseeking one, where the consumer shifts among varied products. Under the hybrid utility assumption, the consumer behaves inertially among the unfamiliar brands for several periods, eventually switching to a varietyseeking behavior when the stationary levels are approached. An empirical illustration with myopic agents is run using scanner databases for three different product categories: fabric softener, saltine cracker, and catsup. Nonlinear specifications provide the best fit of the data, as hybrid functional forms are found in all the products. The resullts confirm the gradual trend to seek variety as the level of familiarity with the purchased items increases.