Led by: Alice Moon, Assistant Professor of Operations, Information and Decisions, The Wharton School
Marketing researchers often rely on willingness-to-pay (WTP; the highest amount a consumer states that they would pay for a given product) as a measure of consumer valuation. In this webinar, Professor Alice Moon presents two projects exploring when and why relying on WTP can be problematic. The first project investigates a well-studied phenomenon (the uncertainty effect) and challenges previous researchers’ assumptions that this phenomenon demonstrates that consumers can be irrationally risk averse. Instead, evidence shows that WTP reflects a lower perceived market price rather than hyper risk aversion. The second project similarly finds that when people consider perceived market price in indicating their WTP, this can lead researchers to faulty inferences. Professor Moon offers one simple remedy for making WTP more interpretable as a measure of personal preference and valuation.