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Activity Number:
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279
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Type:
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Topic Contributed
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Date/Time:
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Tuesday, July 31, 2007 : 10:30 AM to 12:20 PM
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Sponsor:
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Section on Statistics and Marketing
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| Abstract - #308320 |
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Title:
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Optimal Designs for Choice Experiments To measure the Willingness to Pay
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Author(s):
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Bart Vermeulen*+ and Peter Goos and Martina Vandebroek
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Companies:
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Katholieke Universiteit Leuven and Universiteit Antwesrpen and Katholieke Universiteit Leuven
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Address:
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Naamsestraat 69, Leuven, 3000, Belgium
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Keywords:
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optimal design ; willingness-to-pay ; bayesian
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Abstract:
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The marginal rate of substitution (MRS) is the rate that measures the consumer's willingness to give up an attribute of a good in exchange for another attribute. An estimate of the MRS is usually obtained by taking the ratio of two parameter estimates associated with two explanatory variables of a discrete choice model. When price is one of the attributes, the MRS is called the willingness-to-pay (WTP). The use of choice experiments to calculate the WTP has received increasing attention in recent valuation literature. The design of the choice experiment determines the precision of the estimators of the parameters of the model, thus also of a WTP. In this work, we present a design optimality criterion to construct choice experiments which results in the most accurate estimators of a WTP. These designs are compared in terms of estimation accuracy to other commonly used design strategies.
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