Joint Estimation of Discrete Choice Model and Arrival Rate with Unobserved Stock-out Events

Abstract: This paper studies the joint estimation problem of a discrete choice model and the arrival rate of potential customers when unobserved stock-out events occur. In this paper, we generalize [Anupindi et al., 1998] and [Conlon and Mortimer, 2013] in the sense that (1) we work with generic choice models, (2) we allow arbitrary numbers of products and stock-out events, and (3) we consider the existence of the null alternative, and estimates the overall arrival rate of potential customers. In addition, we point out that the modeling in [Conlon and Mortimer, 2013] is problematic, and present the correct formulation.