Gamma-Gamma: Log-Likelihood Function

Source: R/RcppExports.R

Calculates the Log-Likelihood value for the Gamma-Gamma model.

gg_LL(vLogparams, vX, vM_x, vN)

Arguments

vLogparams

a vector containing the log of the parameters p, q, gamma

vX

frequency vector of length n counting the numbers of purchases

vM_x

the observed average spending for every customer during the calibration time.

vN

The value ("number of times observed") with which the LL value of this observation is multiplied before summing across customers.

Value

Returns the Log-Likelihood value for the Gamma-Gamma model.

Details

vLogparams is a vector with the parameters for the Gamma-Gamma model. It has three parameters (p, q, gamma). The scale parameter for each transaction is distributed across customers according to a gamma distribution with parameters q (shape) and gamma (scale).

References

Colombo R, Jiang W (1999). “A stochastic RFM model.” Journal of Interactive Marketing, 13(3), 2-12.

Fader PS, Hardie BG, Lee K (2005). “RFM and CLV: Using Iso-Value Curves for Customer Base Analysis.” Journal of Marketing Research, 42(4), 415-430.

Fader PS, Hardie BG (2013). “The Gamma-Gamma Model of Monetary Value.” URL http://www.brucehardie.com/notes/025/gamma_gamma.pdf.