Have an idea?

Visit Sawtooth Software Feedback to share your ideas on how we can improve our products.

Interpreting price levels

Hi

Assume that we have price part-worths a below in CBC HB:

Price-109    1
Price-139    0.325
Price-169    0.103
Price-199    -1.240
Considering that the slop between 109-139 and 169-199 is high compare to 139-169, can we say that respondents are more price sensitive at both ends of price range? What other interpretation can we have?

Best regards
asked Aug 8, 2017 by Robin59 Bronze (545 points)
retagged Aug 8, 2017 by Walter Williams

1 Answer

0 votes
Robin,

It does look that way, yes. and the effect is very large, so it does look significant.

However, I'd probably be more comfortable if I first confirmed that finding with a statistical test.  At a minimum I'd run the model you show above that treats price as a categorical variable and compare it with a model that has price as a single linear parameter.  Then I'd compare the two models with the -2 log likelihood test and if the difference is significant then I'd be really confident in my assertion that the slopes at the ends of the price range are steeper than in the middle.
answered Aug 8, 2017 by Keith Chrzan Platinum Sawtooth Software, Inc. (116,275 points)
...