Faculty of Economics and Business Administration Publications Database

Willingness-to-Pay Estimation with Choice-Based Conjoint Analysis: Addressing Extreme Response Behavior with Individually Adapted Designs

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Authors:
Gensler, Sonja
Theysohn, Sven
Source:
Volume: 219
Number: 2
Pages: 368 - 378
ISSN-Print: 0377-2217
Link External Source: Online Version
Year: 2012
Keywords: Choice-based conjoint analysis; Willingness to pay; Marketing research
Abstract:

The increasing consideration of behavioral aspects in operations management models has prompted greater use of choice-based conjoint (CBC) studies in operations research. Such studies can elicit consumers’ willingness to pay (WTP), a core input for many optimization models. However, optimization models can yield valid results only if consumers’ WTP is estimated accurately. A simulation study and two field studies show that extreme response behavior in CBC studies, such that consumers always or never choose the no-purchase option, harms the validity of WTP estimates. Reporting the share of consumers who always and never select the no-purchase option allows for detecting extreme response behavior. This study suggests an individually adapted design that avoids extreme response behavior and thus significantly improves WTP estimation accuracy.

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