Demand estimation with text and image data

We propose a demand estimation approach that leverages unstructured data to infer substitution patterns. Using pre-trained deep learning models, we extract embeddings from product images and textual descriptions and incorporate them into a mixed logit demand model. This approach enables demand estimation even when researchers lack data on product attributes or when consumers value hard-to-quantify attributes such as visual design. Using a choice experiment, we show this approach substantially outperforms standard attribute-based models at counterfactual predictions of second choices. We also apply it to 40 product categories offered on Amazon.com and consistently find that unstructured data are informative about substitution patterns.