TY - JOUR
T1 - Willingness to Pay-inference in the absence of rejected propositions
AU - van Cranenburgh, Sander
AU - Chorus, Caspar G.
PY - 2017
Y1 - 2017
N2 - This paper presents a method to infer a Willingness to Pay (WtP) distribution based on a sample of observations of individuals who pay a particular price for a particular quality increase. Crucially, no observations are available of individuals who reject a higher price/higher quality proposition, and choose a lower price/lower quality alternative instead. While at first sight it may seem impossible to infer a WtP distribution in the absence of such rejected propositions, we show that this is possible under the assumption that there is a certain degree of alignment of supply (of propositions) and demand (WtP) in the market. The method is Maximum Likelihood-based, and easy to implement. The method is shown to have a promising empirical performance on a synthetic dataset and a dataset of revealed shopping destination choices.
AB - This paper presents a method to infer a Willingness to Pay (WtP) distribution based on a sample of observations of individuals who pay a particular price for a particular quality increase. Crucially, no observations are available of individuals who reject a higher price/higher quality proposition, and choose a lower price/lower quality alternative instead. While at first sight it may seem impossible to infer a WtP distribution in the absence of such rejected propositions, we show that this is possible under the assumption that there is a certain degree of alignment of supply (of propositions) and demand (WtP) in the market. The method is Maximum Likelihood-based, and easy to implement. The method is shown to have a promising empirical performance on a synthetic dataset and a dataset of revealed shopping destination choices.
KW - Discrete choice
KW - Shopping location
KW - Willingness to Pay
UR - http://www.scopus.com/inward/record.url?scp=85030657495&partnerID=8YFLogxK
U2 - 10.1016/j.jretconser.2017.07.001
DO - 10.1016/j.jretconser.2017.07.001
M3 - Article
AN - SCOPUS:85030657495
SN - 0969-6989
VL - 39
SP - 35
EP - 42
JO - Journal of Retailing and Consumer Services
JF - Journal of Retailing and Consumer Services
ER -