AbstractsBusiness Management & Administration

Estimation of willingness-to-pay. Theory, measurement, and application.

by Christoph Breidert

Institution: Vienna University of Economics and Business
Year: 2005
Keywords: Nokia AB / electronic commerce / price-bundling strategy / formation of prices / willingness to pay / conjoint measurement
Record ID: 1031791
Full text PDF: http://epub.wu.ac.at/1934/1/document.pdf


In this dissertation a new method is proposed to estimate willingness-to-pay (WTP). The method works as an additional interview scene appended to conjoint analysis and it is named throughout this dissertation as the Price Estimation scene (PE scene). In the preceding conjoint analysis price is not included as an attribute. Instead the exchange rate between conjoint utilities and willingness-to-pay is estimated in the PE scene. This is achieved by the use of product stimuli in addition to price scales that are adapted for each respondent in the interview reflecting his or her previously estimated part-worth utilities. In the PE scene the respondents are presented with a sequence of product choices with assigned prices and indicate whether they would actually purchase each of the presented product profiles. The PE scene is a method to estimate willingness-to-pay at an individual level based only on each respondent's provided information. Shortcomings of existing approaches that use conjoint analysis, such as a missing choice rule as well as problems that arise when price is included as an attribute are overcome. The PE scene was tested in an empirical investigation in which the WTPs of the customers of the Nokia online shop in Germany for different product bundles were estimated. (author's abstract)