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Eliciting and estimating reservation price: A semi-compensatory approach

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  • Kaplan, Sigal
  • Bekhor, Shlomo
  • Shiftan, Yoram

Abstract

This study proposes a two-stage method to elicit consumers' price acceptability range. The method combines a conjunctive stage to elicit price acceptability limits with a utility-based stage to choose a preferred product variation. The method is efficient in choice situations entailing many multi-attribute product variations under partial information conditions. A semi-compensatory model complements the method by jointly representing the conjunctive stage with multiple ordered-response models and the choice stage with a multinomial logit model. A case study of ceiling reservation price (CRP) elicitation for students' rental apartment choice shows (i) CRP distribution for different product variations, (ii) model estimation unraveling CRP determinants, and (iii) linkage between CRP and transaction price.

Suggested Citation

  • Kaplan, Sigal & Bekhor, Shlomo & Shiftan, Yoram, 2011. "Eliciting and estimating reservation price: A semi-compensatory approach," Journal of Business Research, Elsevier, vol. 64(1), pages 45-50, January.
    • Handle: RePEc:eee:jbrese:v:64:y:2011:i:1:p:45-50
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    References listed on IDEAS

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    1. Ofir, Chezy, 2004. "Reexamining Latitude of Price Acceptability and Price Thresholds: Predicting Basic Consumer Reaction to Price," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 30(4), pages 612-621, March.
    2. Rao, Akshay R & Sieben, Wanda A, 1992. "The Effect of Prior Knowledge on Price Acceptability and the Type of Information Examined," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 19(2), pages 256-270, September.
    3. Kamel Jedidi & Z. John Zhang, 2002. "Augmenting Conjoint Analysis to Estimate Consumer Reservation Price," Management Science, INFORMS, vol. 48(10), pages 1350-1368, October.
    4. Kamel Jedidi & Sharan Jagpal & Puneet Manchanda, 2003. "Measuring Heterogeneous Reservation Prices for Product Bundles," Marketing Science, INFORMS, vol. 22(1), pages 107-130, July.
    5. Janiszewski, Chris & Lichtenstein, Donald R, 1999. "A Range Theory Account of Price Perception," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 25(4), pages 353-368, March.
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    Cited by:

    1. Chorus, Caspar & van Cranenburgh, Sander & Dekker, Thijs, 2014. "Random regret minimization for consumer choice modeling: Assessment of empirical evidence," Journal of Business Research, Elsevier, vol. 67(11), pages 2428-2436.
    2. Wang, Zhanpeng & Ye, Chao & Liu, Xinxin & Ma, Ruize & Sun, Zilai & Ruan, Junhu, 2023. "Optimal retail sales strategies for old and new products in monopoly and horizontal competition scenarios," Journal of Retailing and Consumer Services, Elsevier, vol. 71(C).
    3. Li, Jianbin & Liu, Lang & Luo, Xiaomeng & Zhu, Stuart X., 2023. "Interactive bundle pricing strategy for online pharmacies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    4. Kaplan, Sigal & Shiftan, Yoram & Bekhor, Shlomo, 2012. "Development and estimation of a semi-compensatory model with a flexible error structure," Transportation Research Part B: Methodological, Elsevier, vol. 46(2), pages 291-304.
    5. Luo, Zheng & Chen, Xu & Kai, Ming, 2018. "The effect of customer value and power structure on retail supply chain product choice and pricing decisions," Omega, Elsevier, vol. 77(C), pages 115-126.

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