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

Sonja Gensler, Oliver Hinz, Bernd Skiera and Sven Theysohn

European Journal of Operational Research, 2012, vol. 219, issue 2, 368-378

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.

Keywords: Choice-based conjoint analysis; Willingness to pay; Marketing research (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:219:y:2012:i:2:p:368-378

DOI: 10.1016/j.ejor.2012.01.002

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