Assortment optimization with repeated exposures and product-dependent patience cost

Abstract

In this paper, we study the assortment optimization problem faced by many online retailers such as Amazon. We develop a cascade multinomial logit model, based on the classic multinomial logit model, to capture the consumers' purchasing behavior across multiple stages. Unlike most of existing studies, our model allows for repeated exposures of a product. In addition, each consumer has a patience budget that is sampled from a known distribution and each product is associated with a patience cost, which is the required amount of the cognitive efforts on browsing that product. We propose an approximation solution to the assortment optimization problem under cascade multinomial logit model.