WTP Estimates

[JvB]

Hi there,

I have several WTP estimates as follows:

Expression Value Robust s.e. Rob t-ratio (0)
WTP_Hoehe300 3.7706 0.8892 4.24
WTP_Hoehe600 2.5797 0.7642 3.38
WTP_Hoehe900 0.6664 0.5987 1.11
WTP_Zeit12 2.6973 0.7349 3.67
WTP_Zeit42 1.9284 0.6663 2.89
WTP_Zeit72 1.1637 0.6612 1.76

I have an experiment with 1,6% as status quo price level so the WTP for a shift in attribute 2 from Hoeheunb (reference category) to Hoehe300 would be 3,7%.
I am confused because status quo level 1,6% + 3,7% = 5,3% total WTP for the mentioned shift in attribute levels BUT the highest price level that was shown in the experiment was 4,8%.
Can it be that the estimated total WTP of 5,3% is higher that the highest shown price level (4,8%)?

Any advice is highly appreciated.
Thank you very much.

[Michiel Bliemer]

That is an interesting question. While I do not think that the marginal WTP could exceed the price level, I see no reason why the total WTP could not exceed the highest price level, especially if the profile with the best levels for each attribute does not appear in the experimental design.

Michiel

[JvB]

Dear Michiel,

thank you for your reply.
The math behind my WTP estimation is:

### WTP with Delta-Method
deltaMethod_settings=list(expression=c(WTP_Hoehe300="-1*(b_HoeheEEE300/b_Beitr)", WTP_Hoehe600="-1*(b_HoeheEEE600/b_Beitr)",
WTP_Hoehe900="-1*(b_HoeheEEE900/b_Beitr)", WTP_Zeit12="-1*(b_ZeitEEE12/b_Beitr)",
WTP_Zeit42="-1*(b_ZeitEEE42/b_Beitr)", WTP_Zeit72="-1*(b_ZeitEEE72/b_Beitr)" ))
apollo_deltaMethod(model, deltaMethod_settings)

With b_Beitr being the price level.
So I think my total WTP estimation should be fine and also the 3,7% MWTP as it relies on the parameters and depending on their size it can be that for the total WTP extrapolation is necessary?!

Thank you very much.

[Michiel Bliemer]

I have only used Apollo once so cannot really comment on this R script, but ratios of parameters is correct if the attributes are numerical and not dummy or effects coded. If HoeheEEE300 and HoeheEEE60 are dummy coded coefficients then the WTP needs to be interpreted somewhat differently and is not simply a ratio of parameters. You may want to post your question on the Apollo forum.

Michiel