Thesis Defense

The effect of price on the hypothetical bias in conjoint analysis

Exploring the relative effects of price on the consumers’ choice

Introduction

• Conjoint analysis

• Marketing managers

• Hypothetical Bias

• WTP

• Incentive-Alignment

• Elicit natural actions

(Ding, Grewal and Liechty, 2005)

Problem Statement

• The price attribute

• Doesn’t effects other attributes

(Bryan and Parry, 2002; Camerer and Hogarth, 1999; Carlsson et. al., 2007)

• Does effects other attributes

(Reibstein et al., 1988; Malhotra, 1982; McCullough and Best, 1979)

• Contradiction

• Common good

• Overstated

(List and Gallet, 2001)

Hypothesis

H1a. In an incentive-aligned conditioning a consumer places more value on price and becomes more

price sensitive.

H1b. In an incentive-aligned conditioning a consumer places less value on innovative product

attributes.

H2. The exclusion of the price attribute does not change the respondents’ relative importance of the

remaining attributes.

H3a. When leaving out the price attribute in an incentive-aligned conditioning, the consumers’

choice does not differ regarding the remaining product attributes.

H3b. When leaving out the price attribute in an incentive-aligned conditioning, the consumers’

Methodology

• Sample

• Design

• 2x2 between subject

• Manipulation

• Incentive-alignment

• Price

• Multinomial Logit model

Estimates final

Results

-0,087 -0,11 -0,12 -0,1 -0,08 -0,06 -0,04 -0,02 0 Uti lity

Price Value Incentive-Aligned

H1a

IF: Videos in the eBook IF: Quizzes in the eBook IF: Homework/ass ignments in the eBook NAH: AHaTN, see highlights and notes from teacher Online supplements: Included No interaction 0,239 -0,392 0,439 0,861 0,288 Incentive-aligned -0,228 0,499 -0,032 1,123 0,155 -0,6 -0,4 -0,2 0 0,2 0,4 0,6 0,8 1 1,2 Uti lity

H1b

Results

H2

H3a

Limitations

• Linearized Price and Shipping Days

• Latent class analysis (4)

• Descriptive statistics

• Actual population

• Number-of-levels effect

(Verlegh, Schifferstein and Wittink, 2002)

• Type of product

References

Ding, M., Grewal, R., & Liechty, J. (2005). Incentive-aligned conjoint analysis. Journal of marketing research, 42(1), 67-82. Ding, M. (2007). An incentive-aligned mechanism for conjoint analysis. Journal of Marketing Research, 44(2), 214-223. Camerer, C. F., & Hogarth, R. M. (1999). The effects of financial incentives in experiments: A review and capital-labor-production framework. Journal of risk and uncertainty, 19(1-3), 7-42.

Carlsson, F., Frykblom, P., & Lagerkvist, C. J. (2007). Preferences with and without prices-does the price attribute affect behavior in stated preference surveys?. Environmental and resource economics, 38(2), 155-164.

Reibstein, D., Bateson, J. E., & Boulding, W. (1988). Conjoint analysis reliability: Empirical findings. Marketing Science, 7(3), 271-286.

Malhotra, N. K. (1982). Information load and consumer decision making. Journal of consumer research, 8(4), 419-430. McCullough, J., & Best, R. (1979). Conjoint measurement: temporal stability and structural reliability. Journal of Marketing

Research, 26-31.