This paper presents a framework for estimating and updating user preferences in the context of app-based recommender systems. We specifically consider recommender systems which provide personalized menus of options to users. A Hierarchical Bayes procedure is applied in order to account for inter- and intra-consumer heterogeneity, representing random taste variations among individuals and among choice situations (menus) for a given individual, respectively. Three levels of preference parameters are estimated: population-level, individual-level and menu-specific. In the context of a recommender system, the estimation of these parameters is repeated periodically in an offline process in order to account for trends, such as changing market conditions. Furthermore, the individual-level parameters are updated in real-time as users make choices in order to incorporate the latest information from the users. This online update is computationally efficient which makes it feasible to embed it in a real-time recommender system. The estimated individual-level preferences are stored for each user and retrieved as inputs to a menu optimization model in order to provide recommendations. The proposed methodology is applied to both Monte-Carlo and real data. It is observed that the online update of the parameters is successful in improving the parameter estimates in real-time. This framework is relevant to various recommender systems that generate personalized recommendations ranging from transportation to e-commerce and online marketing, but is particularly useful when the attributes of the alternatives vary over time.

Estimating discrete choice models on panel data allows for the estimation of preference heterogeneity in the sample. While the Logit Mixture model with random parameters is mostly used to account for variation across individuals, preferences may also vary across different choice situations of the same individual. Up to this point, Logit Mixtures incorporating both inter- and intra-consumer heterogeneity are estimated with the classical Maximum Simulated Likelihood (MSL) procedure. The MSL procedure becomes computationally expensive with an increasing sample size and can be burdensome in the presence of a multi-modal likelihood function. We therefore propose a Hierarchical Bayes estimator for Logit Mixtures with both levels of heterogeneity. It builds on the Allenby-Train procedure, which considers only inter-consumer heterogeneity. To test the proposed procedures, we analyze how well the true patterns of heterogeneity are recovered in a simulation environment. Results from the Monte Carlo simulation suggest that falsely ignoring intra-consumer heterogeneity despite its presence in the data leads to biased estimates and a decreased goodness of fit. The latter is confirmed by a real-world example of explaining mode choices for GPS traces. We further show that the runtime of the proposed estimator is substantially faster than for the corresponding MSL estimator.