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Rescaling utilities for simulation purposes

People are often rescaling utilities before using them in simulations (e.g., using the "exponent" in the Sawtooth Software simulation software).
Sawtooth colleagues - could you please elaborate a bit on how you rescale things for your simulations? Or maybe point to the article that describes it? What other rescaling methods are used? Thanks a lot!
asked Jan 30, 2014 by Dimitri Bronze (645 points)
retagged Jan 30, 2014 by Walter Williams

1 Answer

+1 vote

If you have access to market share data then you can scale your utilities (i.e. choose the exponent) that allows you to come closest to those shares.  

In the absence of market share data you don't really have a target for your scaling.  In cases like this there seems to be a consensus that CBC utilities may be over-predict popular products and under-predict less popular ones, something you can remedy by using a scaling factor smaller than one (0.4 and 0.5 were recommendations I remember hearing people mention).
answered Jan 30, 2014 by Keith Chrzan Platinum Sawtooth Software, Inc. (85,075 points)
I understand about scaling towards real market data. I was curious about scaling in the absence of such data. When you say 0.4-0.5 you mean multiplying all utilities by such a factor?