Willingness-to-pay estimation with choice-based conjoint analysis: Addressing extreme response behavior with individually adapted designs

S. Gensler, O. Hinz, B. Skiera, S. Theysohn

Research output: Contribution to journalArticleAcademicpeer-review

33 Citations (Scopus)

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. (C) 2012 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)368-378
Number of pages11
JournalEuropean Journal of Operational Research
Volume219
Issue number2
DOIs
Publication statusPublished - 1-Jun-2012

Keywords

  • Choice-based conjoint analysis
  • Willingness to pay
  • Marketing research
  • PRODUCT LINE SELECTION
  • OPERATIONS MANAGEMENT
  • UTILITY BALANCE
  • MODELS
  • PRICE
  • HETEROGENEITY
  • OPTION
  • OPTIMIZATION
  • ENDOGENEITY
  • ATTRIBUTES

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