The Click-Based MNL Model: A Framework for Modeling Click Data in Assortment Optimization

We introduce the click-based MNL choice model, a framework for capturing customer purchasing decisions in e-commerce settings. Specifically, we augment the classical Multinomial Logit choice model by assuming that customers only consider the items they have clicked on before they proceed to compare their random utilities. In this context, we study the resulting assortment optimization problem, where the objective is to select a subset of products, made available for purchase, to maximize the expected revenue. Our main algorithmic contribution comes in the form of a polynomial-time approximation scheme (PTAS) for this problem, showing that the optimal expected revenue can be efficiently approached within any degree of accuracy. To establish this result, we develop several technical ideas, including enumeration schemes and stochastic inequalities, which may be of broader interest. Using data from Alibaba’s online marketplace, we fit click-based MNL and latent class MNL models to historical sales and click data in a setting where the online platform recommends a personalized six-product display to each user. We propose an estimation methodology for the click-based MNL model that leverages clickstream data and machine learning classification algorithms. Our numerical results suggest that clickstream data are valuable for predicting choices and that the click-based MNL model can outperform standard logit-based models in certain settings. This paper was accepted by Chung Piaw Teo, optimization. Funding: D. Segev was supported by the Israel Science Foundation [Grant 1407/20]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2021.00281 .

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Publication Details

Journal
Management Science
Published
2024-11-25
DOI
https://doi.org/10.1287/mnsc.2021.00281
Citations
11
Primary Topic
Supply Chain and Inventory Management
Type
article
Field-Weighted Citation Impact
5.29
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article

The Click-Based MNL Model: A Framework for Modeling Click Data in Assortment Optimization

Ali Aouad, Danny Segev, Jacob Feldman, Dennis Zhang
11 citations
Management Science
Supply Chain and Inventory Management
5.29
article

The Click-Based MNL Model: A Framework for Modeling Click Data in Assortment Optimization

Ali Aouad, Danny Segev, Jacob Feldman, Dennis Zhang
article en
11 citations

Abstract

We introduce the click-based MNL choice model, a framework for capturing customer purchasing decisions in e-commerce settings. Specifically, we augment the classical Multinomial Logit choice model by assuming that customers only consider the items they have clicked on before they proceed to compare their random utilities. In this context, we study the resulting assortment optimization problem, where the objective is to select a subset of products, made available for purchase, to maximize the expected revenue. Our main algorithmic contribution comes in the form of a polynomial-time approximation scheme (PTAS) for this problem, showing that the optimal expected revenue can be efficiently approached within any degree of accuracy. To establish this result, we develop several technical ideas, including enumeration schemes and stochastic inequalities, which may be of broader interest. Using data from Alibaba’s online marketplace, we fit click-based MNL and latent class MNL models to historical sales and click data in a setting where the online platform recommends a personalized six-product display to each user. We propose an estimation methodology for the click-based MNL model that leverages clickstream data and machine learning classification algorithms. Our numerical results suggest that clickstream data are valuable for predicting choices and that the click-based MNL model can outperform standard logit-based models in certain settings. This paper was accepted by Chung Piaw Teo, optimization. Funding: D. Segev was supported by the Israel Science Foundation [Grant 1407/20]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2021.00281 .

Management ScienceVol. 71(8)
Tel Aviv University (IL), Washington University in St. Louis (US), Massachusetts Institute of Technology (US)
Partnerships for the goals
Openalex Percentile: Top 4%
Supply Chain and Inventory Management
5.29
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The Click-Based MNL Model: A Framework for Modeling Click Data in Assortment Optimization — Ali Aouad, Danny Segev, et al. · Management Science (2024) | TGRS Research Map | TGRS