Latent change in recurrent choice data

This paper introduces dynamic latent-class models for the analysis and interpretation of stability and change in recurrent choice data. These latent-class models provide a nonparametric representation of individual taste differences. Changes in preferences are modeled by allowing for individual-level transitions from one latent class to another over time. The most general model facilitates a saturated representation of class membership changes. Several special cases are presented to obtain a parsimonious description of latent change mechanisms. An easy to implement EM algorithm is derived for parameter estimation. The approach is illustrated by a detailed analysis of a purchase incidence data set.