Modelling the Complex Choices of a Business Purchase

Abstract

In this paper, a choice modelling approach is used to consider attributes of a pre-purchase behaviour when purchasing a business (franchise outlet). Choice modelling methods are consistent with consumer theory, and focus on an attribute-based determination of value. However, choice modelling can place a severe cognitive burden upon respondents and induce satisficing rather than maximising behavioural patterns. In this framework, a choice model utilising best-worst scaling is evaluated to ascertain the benefits for potential purchasers and vendors. Findings indicate limited capacity for potential investors to rationalise the choices presented.