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

journal contribution
posted on 2012-06-01, 00:00 authored by S Gensler, O Hinz, Bernd SkieraBernd Skiera, S Theysohn
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. © 2012 Elsevier B.V. All rights reserved.

History

Journal

European Journal of Operational Research

Volume

219

Issue

2

Pagination

368 - 378

ISSN

0377-2217

Publication classification

C1.1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2012, Elsevier