Demand for Conversational AI

Elliott Ash, Francesco Capozza and Sergio Galletta

No 12673, CESifo Working Paper Series from CESifo

Abstract: The market for conversational AI companions is booming, yet by standard stated-preference and welfare measures relational AI appears barely demanded. Using a preregistered, within- respondent conjoint experiment in a U.S. online sample (N = 1,989), we estimate demand across five purposes (administrative assistance, studying, wellness, friendship, and romance). Purpose dominates interest, instrumental uses rank highest, romance lowest, and the gradient is corroborated by Google Trends and anonymized ChatGPT usage data. Free pricing raises interest sharply but is attenuated for relational purposes, revealing non-monetary signaling costs that price reductions cannot eliminate; privacy and personalization shift demand, while interaction modality does not. Second-order beliefs exceed own interest in proportion to the purpose penalty, consistent with a single stigma parameter suppressing stated below latent demand. Recovering this suppression, corrected consumer surplus for a free romantic companion turns positive, the welfare mirror image of social media’s collective trap, with the externality sign reversed and a low-adoption rather than over-adoption equilibrium. Because we identify only the individual suppression component, this correction is a lower bound. A complementary hierarchical Bayes structural demand model recovers the full distribution of individual willingness to pay and embeds respondent-level signaling sensitivity as a structural covariate: social-image suppression loads specifically on relational purpose coefficients (Romantic: −0.841 per SD; Friend: −0.683 per SD) while leaving price and attribute sensitivities unchanged, and zeroing out suppression shifts the posterior mean WTP for a romantic companion by +$1.62/month, independently corroborating the conjoint-based welfare correction.

Keywords: AI; conjoint experiment; WTP; second-order beliefs (search for similar items in EconPapers)
JEL-codes: C81 C93 D82 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-ain and nep-exp
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