Estimating customers' willingness-to-pay by means of a probabilistic elicitation method

Price often appears to be a strong indicator of a product/service quality and is sometime the unique determinant of purchase. Methods such as conjoint measurement or contingent valuation can help managers to set the price:conjoint analysis enables to calibrate trade-offs respondents make in terms of price and in fine elicit respondents' willingness-to-pay for a product/service.But this method appears in most cases difficult to undertake because of the implementation cost and because price levels have to be set in advance and are similar for all respondents. The approach we propose is inspired by Dominitz and Manski's (1997) work on probabilistic expectations. With the objective of testing its potential, we completed a survey of 500 patients about their willingness-to-pay for at-home nursing services. Each respondent both performed the probabilistic CVM and conjoint measurement tasks. Comparing willingness-to-pay measures obtained from both approaches reveals promising.