# WTP for ACBC

Hi everyone,

I have conducted an ACBC with summed price. I have used HB to estimate importance of attributes and PWU of attribute levels.

Now, I also want to look at WTP. If I understood the Sawtooth resources right, I have two options:

1.    Computing Dollar Equivalents from Utilities

This is not recommended in your resources. However, I can see that it is applied in some peer-reviewed papers.

I have one question:

I have used a summed price approach for the ACBC. For the HB estimation, I used piecewise price with a total of six levels (lowest + highest + 4 in between). Is it acceptable to still use the formula

(pm,i - pn,i )/ (v(pm,i) - v(pn,i))   ?

(where pm,i represents the lowest price point in a linear price function and pn,i displays the highest price point for each respondent, v(pm,i) represents the utility of pm,i and v(pn,i) displays the utility of pn,i.)

2.    Using market simulations
a.    SOS approach

When I use the SOS approach, I get the error:

“In scenario “My WTP Scenario”: Could not find a competitive set that satisfies the prohibitions.

I have set 2 prohibitions in my ACBC. How can I solve this problem?

b.    Fixed WTP product

I define my product according to https://sawtoothsoftware.com/help/lighthouse-studio/manual/index.html?understanding-willingness-to-p.html .

My question is: what about the price? What price level do I put? For the competition products, I set realistic prices as they don’t change (however, I am restricted to my 6 price levels). For my own product, do I put the lowest price level (as the default levels are the cheapest ones)?

Also: with my current settings, my results show no problems with extrapolation or WTP not converged. However, my surcharges for enhanced attribute levels seem quite high. Calculating the surcharges via (pm,i - pn,i )/ (v(pm,i) - v(pn,i)) render much lower (and realistic) values. What could be my mistake? (I configured 5 competition products and a none option).

Thank you in advance for any guidance!

Michael

First, an approximation to the linear approach is to take the endpoints from the piecewise price function.  But, to stay more true to the linear approach it would be better to rerun the ACBC HB estimation with just the two endpoints specified in the price grid and to specify using the Linear estimation approach rather than piecewise.

Regarding your second question, I don't know why with only two prohibitions the SOS approach breaks out without ability to find non-prohibited solutions.  Perhaps that's a good issue to package up your files and send to our technical support team.

On the third issue, it's probably unrealistic to ask our software to use the lowest price point as the base starting point to estimate WTP.  Probably something more toward the realistic price of the product given an average configuration of enhancements would be more appropriate.  Don't know if that's why you're seeing large WTP values.
answered Feb 10 by Platinum (199,115 points)
Dear Brian,