Accurately measuring willingness to pay for consumer goods: a meta-analysis of the hypothetical bias
By Jonas Schmidt, Tammo H. A. Bijmolt. Journal of the Academy of Marketing Science, 2019
254 citations recorded by the source corpus.
Consumers’ willingness to pay (WTP) is highly relevant to managers and academics, and the various direct and indirect methods used to measure it vary in their accuracy, defined as how closely the hypothetically measured WTP (HWTP) matches consumers’ real WTP (RWTP). The difference between HWTP and RWTP is the “hypothetical bias.” A prevalent assumption in marketing science is that indirect methods measure WTP more accurately than do direct methods. With a meta-analysis of 77 studies reported in 47 papers and resulting in 115 effect sizes, we test that assumption by assessing the hypothetical bias. The total sample consists of 24,347 included observations for HWTP and 20,656 for RWTP. Moving beyond extant meta-analyses in marketing, we introduce an effect size metric (i.e., response ratio) and a novel analysis method (i.e., multivariate mixed linear model) to analyze the stochastically dependent effect sizes. Our findings are relevant for academic researchers and managers. First, on average, the hypothetical bias is 21%, and this study provides a reference point for the expected magnitude of the hypothetical bias. Second, the deviation primarily depends on the use of a direct or indirect method for measuring HWTP. In contrast with conventional wisdom, indirect methods actually overestimate RWTP significantly stronger than direct methods. Third, the hypothetical bias is greater for higher valued products, specialty goods (cf. other product types), and within-subject designs (cf. between-subject designs), thus a stronger downward adjustment of HWTP values is necessary to reflect consumers’ RWTP.
Subfields: Economics and Econometrics, Marketing, Organizational Behavior and Human Resource Management
View Paper: https://www.semanticscholar.org/paper/702706da6d053fbd11f3ed699a34e0efd479ab54
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Marketing
Citations in the corpus
- The use of the health belief model to assess predictors of intent to receive the COVID-19 vaccine and willingness to pay (2020, background): “Another limitation of the study is the bias associated with the use of hypothetical WTP during the vaccine development process, before the final product exists.(25) The use of WTP in real contexts would reflect consumers’ actual valuation of the vaccine.”
- Understanding COVID-19 vaccine demand and hesitancy: A nationwide online survey in China (2020, background): “Another limitation of the study is the bias associated with the assessment of acceptance and WTP for a hypothetical COVID-19 vaccine before the final product exists [38].”
- The potential of generative AI for personalized persuasion at scale (2024, background): “Previous research has found that self-reported WTP is both an interpretable outcome 66 and a reflection of people’s actual, in-market demand and pricing decisions 67 .”