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Estimating Willingness to Pay with Exaggeration Bias-Corrected Contingent Valuation Method

Author

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  • Joo Heon Park

    (Department of Economics, Dongduk Women's University, Sungbuk-Gu, Seoul 136-714, Korea)

  • Douglas L. MacLachlan

    (Department of Marketing and International Business, Michael G. Foster School of Business, University of Washington, Seattle, Washington 98195)

Abstract

Estimates of the prices customers are willing to pay for new products or services using responses from survey questionnaires are notoriously biased on the high side. An approach to obtaining more realistic estimates is suggested here, called the exaggeration bias-corrected contingent valuation method (EBC-CVM). The method is an alternative to conventional contingent valuation methods (CVMs) that have been used in economics and, to a lesser extent, in marketing. Two experiments and one field study are presented to demonstrate the effectiveness of the method. In each case, the proposed method outperformed conventional CVMs in comparison with real choices or more realistic price estimates.

Suggested Citation

  • Joo Heon Park & Douglas L. MacLachlan, 2008. "Estimating Willingness to Pay with Exaggeration Bias-Corrected Contingent Valuation Method," Marketing Science, INFORMS, vol. 27(4), pages 691-698, 07-08.
    • Handle: RePEc:inm:ormksc:v:27:y:2008:i:4:p:691-698
    DOI: 10.1287/mksc.1070.0321
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    References listed on IDEAS

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    5. Won Seok Lee & Choong-Ki Lee & Yooshik Yoon & Jihee Kim, 2015. "Research Note: Exaggeration Bias-Corrected Contingent Valuation Method: The Case of Olle Trail," Tourism Economics, , vol. 21(6), pages 1323-1330, December.
    6. Ke-Wei Huang, 2009. "Optimal criteria for selecting price discrimination metrics when buyers have log-normally distributed willingness-to-pay," Quantitative Marketing and Economics (QME), Springer, vol. 7(3), pages 321-341, September.
    7. Nagy, Benedek, 2012. "A repülőtéri zsúfoltságkezelési módszerek hatékonysága [The efficiency of methods to treat crowding in airports]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 74-91.
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