Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5111319 | Journal of Retailing and Consumer Services | 2017 | 8 Pages |
Abstract
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.
Keywords
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Marketing
Authors
Sander van Cranenburgh, Caspar G. Chorus,