An empirical comparison of methods to measure willingness to pay by examining the hypothetical bias

Christina Sichtmann, Markus Voeth, Robert Wilken and Klaus Backhaus

In the literature, several methods to measure willingness to pay (WTP) have been proposed. However, there is still little knowledge about their reliability.
  

An Empirical Comparison of Methods to Measure Willingness to pay by Examining the Hypothetical Bias

Klaus Backhaus and Robert WilkenUniversity of Muenster

Markus Voeth and Christina SichtmannUniversity of Hohenheim

INTRODUCTION

Knowledge of the exact willingness to pay (or reservation price) is essential for a company's profit: errors in predicting willingness to pay may lead to the selection of an inferior price and, therefore, induce the loss of potential profit or market share. Empirical studies show that even small price variations can have a sustainable impact on profit (Garda & Marn 1993; Marn...

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