Interdependence in replacement decisions

Research output: Contribution to journalArticlepeer-review


Virtually every household in a modern economy owns a refrigerator, a personal computer and an automobile. Given the inter-temporal nature of replacement decisions, the existing literature has resorted to the technique of dynamic programming, and most recently to the theory of stochastic processes. This article focuses on micro replacement decisions. We study replacement of home appliances in the United States, and construct a test statistic that leads to conclude that replacement decisions might be correlated across appliances. Finally, we enrich our analysis by developing a theoretical model in which replacement decisions are interdependent.

Original languageEnglish
Pages (from-to)211-225
Number of pages15
JournalInternational Journal of Operations and Quantitative Management
Issue number3
StatePublished - 2003


  • Replacement
  • Stochastic process


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