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AbstractA stochastic model is proposed to examine how changes in frequency of price discounts affect brand choice decisions of consumers who exhibit varietyseeking and reinforcement behavior. It is shown that the effect on choice depends on whether the brand offering discounts is a major or minor brand in the product category. This model extends the existing literature on stochastic models of varietyseeking behavior by explicitly incorporating switching due to promotions along with intrinsic switching due to varietyseeking.

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