How Should Consumers’ Willingness to Pay Be Measured? An Empirical Comparison of State-of-the-Art Approaches

This study compares the performance of four commonly used approaches to measure consumers’ willingness to pay with real purchase data (REAL): the open-ended (OE) question format; choicebased conjoint (CBC) analysis; Becker, DeGroot, and Marschak’s (BDM) incentive-compatible mechanism; and incentive-aligned choice-based conjoint (ICBC) analysis. With this five-in-one approach, the authors test the relative strengths of the four measurement methods, using REAL as the benchmark, on the basis of statistical criteria and decision-relevant metrics. The results indicate that the BDM and ICBC approaches can pass statistical and decision-oriented tests. The authors find that respondents are more price sensitive in incentive-aligned settings than in non-incentive-aligned settings and the REAL setting. Furthermore, they find a large number of “none” choices under ICBC than under hypothetical conjoint analysis. This study uncovers an intriguing possibility: Even when the OE format and CBC analysis generate hypothetical bias, they may still lead to the right demand curves and right pricing decisions.

Health-related quality of life and willingness to pay per quality-adjusted life-Year threshold—A study in patients with epilepsy in China

Objectives
To assess the health-related quality of life (HRQOL) and willingness to pay (WTP) per quality-adjusted life-year (QALY) amount of patients with epilepsy in China.
Methods
Adults with epilepsy and a healthy control were recruited in two tertiary hospitals in China. Participants completed two indirect utility elicitation instruments (Quality of Well-being Scale-self administered version and EuroQol five-dimensional questionnaire) and a WTP questionnaire. Correlations between sociodemographic or epilepsy-specific variables (age of epilepsy onset, duration of epilepsy, seizure types, types of antiepileptic drug treatment, etc.) and HRQOL or WTP/QALY were assessed to identify the candidate predictor. Multiple linear regression models were adopted to investigate the predictive performances of identified candidate predictors. Data analyses were performed on SPSS 20.0 (SPSS, Inc., Chicago, IL).
Results
For utilities of both the Quality of Well-being Scale-self administered version and the EuroQol five-dimensional questionnaire, patients with epilepsy had statistically lower values than did the control group (P < 0.0001). In terms of the WTP/month, the percentage of WTP accounting for the monthly income and the WTP/QALY values from the epilepsy group were substantially higher than those from the control group (P < 0.0001).
View the MathML sourceWTP/QALY=12×WTPMonth1−Utility(CurrentHealth)
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The multiple linear regression model identified working status (P = 0.05), seizure types (P = 0.022), income (P = 0.006), and self-rating health state (P < 0.05) as predictors of HRQOL while income (P = 0.000) and self-rating health state (P < 0.05) statistically contributed to the variations in WTP/QALY value for the epilepsy group.
Conclusions
Patients with epilepsy had substantially lower HRQOL than did the healthy population.

A risk worth taking: perceived risk as moderator of satisfaction, loyalty, and willingness-to-pay premium price

This research investigates the moderating role of perceived risk in the relationship between satisfaction, loyalty, and willingness to pay premium price (WTP). A total of 364 respondents were recruited from Amazon's Mechanical Turk panel. Financial, social, performance, and psychological risks have significant negative effects on the relationship between satisfaction and WTP, whereas only financial risks have significant negative effects on the relationship between loyalty and WTP. Using moderated mediation analysis, we found that the mediating effects of loyalty diminish significantly in high social risk conditions and diminish completely in high financial risk conditions.

Letter from Moses Levy regarding New York congregation's agreement to pay half cost for return of Reverend H. H. Samuel Cohen

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Estimating the benefits of farm animal welfare legislation using the contingent valuation method

This paper presents the method and findings of a contingent valuation (CV) study that aimed to elicit United Kingdom citizens' willingness to pay to support legislation to phase out the use of battery cages for egg production in the European Union (EU). The method takes account of various biases associated with the CV technique, including 'warm glow', 'part-whole' and sample response biases. Estimated mean willingness to pay to support the legislation is used to estimate the annual benefit of the legislation to UK citizens. This is compared with the estimated annual costs of the legislation over a 12-year period, which allows for readjustment by the UK egg industry. The analysis shows that the estimated benefits of the legislation outweigh the costs. The study demonstrates that CV is a potentially useful technique for assessing the likely benefits associated with proposed legislation. However, estimates of CV studies must be treated with caution. It is important that they are derived from carefully designed surveys and that the willingness to pay estimation method allows for various biases. (C) 2003 Elsevier Science B.V. All rights reserved.

Does the Use of Mobile Devices (Tablets and Smartphones) Affect Stated Choice Behavior in Web Surveys? An Application to Environmental Valuation

Web surveys are becoming increasingly popular in survey research. Compared with face-to-face, telephone and mail surveys, web surveys may contain a different and new source of measurement error and bias: the type of device that respondents use to answer the survey questions. To the best of our knowledge, this is the first study that tests whether the use of mobile devices affects survey characteristics and stated preferences in a web-based choice experiment. The web survey was carried out in Germany with 3,400 respondents, of which 12 per cent used a mobile device (i.e. tablet or smartphone), and comprised a stated choice experiment on externalities of renewable energy production using wind, solar and biomass. Our main finding is that survey characteristics such as interview length and acquiescence tendency are affected by the device used. In contrast to what might be expected, we find that, compared with respondents using desktop computers and laptops, mobile device users spent more time to answer the survey and are less likely to be prone to acquiescence bias. In the choice experiment, mobile device users tended to be more consistent in their stated choices, and there are differences in willingness to pay between both subsamples.