In this presentation, Prof. Dr. Christian Schlereth (Chair of Digital Marketing at WHU - Otto Beisheim School of Management) summarizes findings from his Management Science article (co-authored by Bernd Skiera, Goethe University Frankfurt) on the estimation of willingness to pay. He presents today’s use of data-collection methods to estimate willingness-to-pay. He also outlines three shortcomings with the estimation and proposes the new method separated adaptive dual response (SADR), which substantially improves the estimation of willingness-to-pay and overcomes these shortcomings.

1. Two New Features in Discrete Choice
Experiments to Improve Willingness to Pay
Estimation that Result in SDR and SADR:
Separated (Adaptive) Dual Response
Management Science (2017), 63(3), 829-842
Christian Schlereth
WHU – Otto Beisheim School of Management
Bernd Skiera
Goethe University Frankfurt

2. Carson et al. (1994); Dhar (1997); Louviere et al. (2000); Haaijer et al. (2001); Vermeulen et al. (2008)
Choice-based conjoint nowadays one of the most important method
to measure willingness to pay
A B C
Do not
purchase
any of the
three
Attribute 1
Attribute 2
Attribute 3
…
Choice-based conjoint
 Free-choice questions only, i.e., each choice-sets contains a no-purchase option
 No-purchase option provides:
- Clear reference point
- Realistic experimental setting
- Allows prediction of market penetration
2

3. Information gained when choosing a product
A B C
Do not
purchase
any of the
three
Attribute 1
Attribute 2
Attribute 3
…
Purchase decision Selection decision
B > 0
Product B provides sufficient utility for a
purchase
B > A; C
Choice-based conjoint
3

4. Information gained when choosing no-purchase option
A B C
Do not
purchase
any of the
three
Attribute 1
Attribute 2
Attribute 3
…
Not enough data to learn about individual preferences
Purchase decision Selection decision
0 > A; B; C
None of the products provide sufficient utility
for a purchase
No information about relative attractiveness
of attributes
Choice-based conjoint
4

5. Dual response: Selection decisions are also observed when no-
purchase option is chosen
 Dual ResponseA B C
Attribute 1
Attribute 2
Attribute 3
…
Purchase most preferred
Do not purchase most
preferred
Forced choice question
Free choice question
Purchase decision Selection decision
0 > A; B; C
From free choice question From forced choice question
 Selection decision is always observable; thus: more accurate estimation of preferences
 But higher cognitive effort for a respondent due to double amount of questions
B > A; C
Dhar & Simonson (2003); Dhar & Nowlis (2004); Brazell et al. (2006)
Dual response
5

6. Shortcoming: Context effects in choice-based conjoint
Examples:
 Attraction Effect:
 No-purchase option is chosen less frequently, if a dominant product alternative exists
 Similarity Effect:
 No-purchase option is chosen more frequently, if similar attractive product alternatives exists, as an “easy way out”
Huber, Payne, and Puto (1982); Tversky and Shafir (1992); Dhar (1997); Rooderkerk, Van Heerde, and Bijmolt (2011);
A B C
Do not
purchase
any of the
three
Attribute 1
Attribute 2
Attribute 3
…
6
• Whether products provide sufficient utility for a purchase is not the only reason for a respondent
to pick the no-purchase option
• Context effects typically neglected in estimation

7. Shortcoming: Context effects in dual response
Other empirical findings
- Higher share of chosen no-purchase option (Dhar and Simonson 2003; Dhar and Nowlis 2004; Brazell et al.
2006)
- Artificial time delay between selection decisions and purchase decisions reduces no-purchase share
(Dhar and Simonson 2003)
A B C
Attribute 1
Attribute 2
Attribute 3
…
Purchase most
preferred
Do not purchase
most preferred
7
• Context effects also exist for dual response
• As a result, willingness to pay estimates are substantially lower compared to choice-based conjoint

8. Shortcoming: Extreme response behavior
Extreme response behavior (Gensler et al. 2012)
• Respondent always chooses no-purchase option
• No information when respondent will start buying
• WTP might be estimated too low
• Respondent never chooses no-purchase option
• No information, when respondent will stop buying
• WTP might be estimated too high
Extreme response behavior in previous studies (if reported) :
Choice-Based Conjoint
• 58% in Gensler et al. (2012)
• 64% in Parker and Schrift (2011)
• 22% in Wlömert and Eggers (2014)
• Up to 56% in our studies
Dual Response
• 31% in Wlömert and Eggers (2014)
• Up to 36% in our studies
8

9. Shortcoming: Impact of purchase probability on measurement accuracy
9
Implication: Companies estimate willingness to pay more accurately for a respondent who
does not intend to buy their product
If a choice-set contains more than one alternative, likelihood increases that a respondent
compares a rather attractive alternative against the no-purchase option  purchase
decisions are less informative for a respondent with high purchase probability

10. Aims of paper
 Development of SDR: “Separated Dual Response“, which
1. Avoids context effects by imposing a strict separation between all forced and free choice questions
 Development of SADR: “Separated (Adaptive) Dual Response“, which also
2. Avoids extreme response behavior
by imposing a strict separation between all forced and free choice questions
through an adaptive mechanism that captures heterogeneity in willingness to pay
3. Ensures similar accuracy in measured willingness to pay, independent of a respondent‘s purchase probability
10

11. Agenda
11
 Mechanism of SDR and SADR
 Simulation study to analyze
dependence between willingness to pay accuracy
and purchase probability
 Tests of statistical and behavioral endogeneity
 Insights from three empirical studies

12. SADR (Separated Adaptive Dual Response):
In addition to feature 1 („strict separation“), we use
decisions in forced choice questions to adaptively
identify fewer, but more informative free choice
questions
Two new features for discrete choice experiments
resulting in SDR and SADR
12
Feature 1:
Strictly separating forced and
free choice questions
Feature 2:
Adaptive mechanism to select fewer, but more
informative, free choice questions
SDR (Separated Dual Response):
We ask all forced choice questions first and then all
free choice questions. Thus, we introduce a time
delay between a forced and a free choice question
Separated Dual
Response
(SDR)
...
A1 B1 C1
Buy
Selected1
Do not
buy
A2 B2 C2
Buy
Selected2
Do not
buy
...
Separated Adaptive Dual
Response
(SADR)
...
A1 B1 C1
Buy A 1
Do not
buy
A2 B2 C2
Buy A 2
Do not
buy
...

13. Adaptive mechanism of SADR – Separated Adaptive Dual Response
13
Information
gap
1. Forced choice block
 Use efficient choice design for all respondents (e.g. D-optimal)
 Use linear probability model to approximate individual preference order
(Heckman & Snyder 1997)
 Simulate preference order of all products in full factorial design
2. Free choice block
 "Smartly“ select n products for inclusion in purchase questions
 Use binary logit model to select next area, which provides most information
about purchase decision making
 Iterate m times
Select A, Select B, Select C
Select A, Select B, Select C
…
SADR
Purchase Presented, Purchase None
…
Estimate preliminary preference order
Most preferred productLeast preferred product 75%50%25%
Preference order
0% (= No Purchase)
Probability of a purchase
100% (= Purchase)

14. A respondent‘s perspective - screenshots of SADR
Forced Choice Block:
(“pick one of the products“)
j forced choice questions
A1 B1 C1
A2 B2 C2
...
A3 B3 C3
A4 B4 C4
A5 B5 C5
Free Choice Block:
(“buy or not buy product“)
Block 1 of n free choice questions
Buy D1' Do not buy D1'
Buy D2' Do not buy D2'
Buy ... Do not buy ...
Buy ... Do not buy ...
...
Block 2 of n free choice questions
14

15. Summary of studied discrete choice experiments
15
Choice-Based Conjoint
(CBC)
Dual Response
(DR)
Separated Dual
Response
(SDR)
Separated Adaptive Dual
Response
(SADR)
A1 B1 C1
Do not
buy
A1 B1 C1
...
Buy
Selected1
Do not
buyA2 B2 C2
Do not
buy
A2 B2 C2
Buy
Selected2
Do not
buy
...
A1 B1 C1
Buy
Selected1
Do not
buy
A2 B2 C2
Buy
Selected2
Do not
buy
...
...
A1 B1 C1
Buy A 1
Do not
buy
A2 B2 C2
Buy A 2
Do not
buy
...
Mechanism
Shortcomings
Context effects
Extreme response
behavior
Impact of purchase probability
on accuracy of WTP
X
X
X
X
X
X
X
X
-- --
--
--

16. Estimation
Scale-extended model
 DR-2Max-model (Diener, Orme, and Yardley 2006)
 Extended to account for differences in consistency between selection and
purchase decisions (Swait and Andrews 2003)
Force choice questions Free choice questions
Estimation
 Multinomial logit model using Hierarchical Bayes
 All models implemented in Matlab
A B C
Attribute 1
Attribute 2
Attribute 3
…
Buy product D
Do not buy product D
A B C
Attribute 1
Attribute 2
Attribute 3
…
A B C
Attribute 1
Attribute 2
Attribute 3
…
Buy product D
Do not buy product D
Buy product D
Do not buy product D
 
 
 
   
h,i,j
h,i ',j'
j j'
d
d
1 h,i 2 h,i'
h
j J i C j' J' i' C 2 0 2 h,i'1 h,j
J
exp V exp V
L
exp V exp Vexp V
 
    
 
   
           
 
 

16

17. Agenda
17
 Mechanism of SDR and SADR
 Simulation study to analyze
dependence between willingness to pay
accuracy and purchase probability
 Tests of statistical and behavioral endogeneity
 Insights from three empirical studies

18. Monte carlo simulation study
18
Set-up based on:
18 choice sets with
4 attributes and
4 levels each
Setup similar to:
• Aurora and Huber (2001)
• Toubia et al. (2004)
Experimental Conditions Number of Levels Values
Types of Discrete Choice
Experiments
7
 Choice-Based Conjoint ( 0 separate free choice questions)
 Dual response, SDR (18 separate free choice questions)
 SADR [m=1, n=9] ( 9 separate free choice questions)
 SADR [m=9, n=1] ( 9 separate free choice questions)
 SADR [m=3, n=3] ( 9 separate free choice questions)
 SADR [m=2, n=2] ( 4 separate free choice questions)
 SADR [m=4, n=4] (16 separate free choice questions)
4

4

5

6

7
2
  = .5 (low accuracy)
  = 3 (high accuracy)
2
 σ² = .5  (low heterogeneity)
 σ² = 3  (high heterogeneity)
3
 γ = .6 (low: ~10% no-purchase decisions)
 γ = -.8 (medium: ~30% no-purchase decisions)
 γ = -1.75 (high: ~50% no-purchase decisions)
Number of conditions 4 ∙ 2 ∙ 2 ∙ 3 = 48
Number of types of discrete
choice experiments
7
Number of replications 5
Total number of studies 48 ∙ 7 ∙5 = 1,680
Notes: 100 respondents; SADR = separated adaptive dual response; m = number of iterations in free choice block of SADR,
each of which consists of n free choice questions.

19. Comparison of ability to recover constant in utility function
19
Purchase
Probability
Share of No-
Purchases
Choice-
Based
Conjoint
Dual
Response &
SDR
SADR
[m=1,n=9] [m=9,n=1] [m=3,n=3] [m=2,n=2] [m=4,n=4]
LOW HIGH .56 .58 .71 .70 .70 .83 .61
MIDDLE MIDDLE .63 .68 .73 .71 .72 .85 .62
HIGH LOW .82 .89 .74 .72 .73 .86 .63
Mean .67 .72 .73 .71 .72 .85 .62
Notes: RMSE = root mean squared error; lower values indicate better ability. SDR = separated dual response; SADR= separated adaptive dual response; m =
number of iterations in free choice block, each of which consists of n free choice questions.
• Ability to recover constant in utility function (RMSE)
• serves to predict the error of the probability that a respondent will buy a product or not
• varies with purchase probability for choice-based conjoint and dual response, but not for
SADR

20. Agenda
20
 Mechanism of SDR and SADR
 Simulation study to analyze
dependence between willingness to pay accuracy
and purchase probability
 Tests of statistical and behavioral endogeneity
 Insights from three empirical studies

21. Examination of endogeneity
Violation of assumption of independence of
choices, because design of free choice
questions depend upon previous choices and
therefore on realizations of error term
Hauser and Toubia (2005); Liu, Otter, and Allenby
(2007)
Statistical Perspective Behavioral Perspective
Adaptive nature of free choice questions might
affects a respondent’s choices and cause
anchoring or framing effects
DeShazo (2002); Alberini, Kanninen, and Carson (1997);
Hanemann, Loomis, and Kanninen (1991)
Xforced choices
β, σ²
Forced Choice Block Free Choice Block
Yforced choices Xfree choices Yfree choices
Examined using approach of
Alberini, Kanninen, and Carson (1997)
Examined using approach of
Liu, Otter, and Allenby‘s (2007)
21

22. 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
-2.6
-2.4
-2.2
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
-2.6
-2.4
-2.2
SADR with adaptive design
SADR with fixed design
MCMC iteration
MCMC iteration
EstimateofconstantEstimateofconstant
Statistical concerns of endogeneity can be ignored
 Mechanism of creating Xfree choice can be ignored if (Liu, Otter, and Allenby‘2007):
• estimation method adheres to likelihood principle
• Xfree choice does not contain information that is beyond Yforced choice and Yfree choice
Demonstration
• Comparison of recovery accuracy of SADR with
adaptive free choice question design and a
fixed (D-optimal) design
• 18 Choice-Sets, 44-design, 16 free choice
questions
• Sampled parameter values of 1000 consumers
drawn from normal distribution
• Mean (StdDev) of constant: -2.40 (2.45)
-2.40 (1.98)
-2.43 (1.93)
22

23. Behavioral concerns of endogeneity can be ignored
Indications of behavioral concerns of endogeneity, studied in the double bounded dichotomous
choice literature
 Downward shift in WTP through follow-up free choice questions (e.g., from $250 to $150)
 See further Alberini, Kanninen, and Carson (1997), Hanemann, Loomis, and Kanninen (1991), and McFadden and Leonard (1995)
Recommendations to avoid behavioral endogeneity
 Well-balanced, symmetric designs result in very modest bias, even if anchoring is strong (Veronesi, Alberini, and Cooper
2011)
 Testing for structural shifts in WTP by estimating additional term δ·ln(pos∙) in utility function (Alberini, Kanninen, and Carson
1997)
Applying Alberini, Kanninen, and Carson’s (1997) test in our empirical studies detects no structural
shift in WTP for later free choice questions
23

24. Agenda
24
 Mechanism of SDR and SADR
 Simulation study to analyze
dependence between willingness to pay accuracy
and purchase probability
 Tests of statistical and behavioral endogeneity
 Insights from three empirical studies

25. Description of three empirical studies to compare (SDR and) SADR
against choice-based conjoint and dual response
Study 2:
Basketball tickets
• N = 880 (customers of market leader)
• 52·4·3·2 Balanced Design
Study 1:
Tablets
• N = 459 (fans of a major league
basketball team)
• 43 Balanced Design
Choice-
Based
Conjoint
Dual
Response
SADR
Force Choice
Questions
-- 18 18
Free Choice
Questions
18 18 9
Study 3:
Video-on-demand
Choice-
Based
Conjoint
Dual
Response
SADR
Force Choice
Questions
-- 12 12
Free Choice
Questions
12 12 6
Choice-
Based
Conjoint
Dual
Response
SDR SADR
Force Choice
Questions
-- 12 12 12
Free Choice
Questions
12 12 12 6
• N = 1,425
• 4·32·23 Balanced Design
25

26. Set-up of questionnaire
Choice-Based
Conjoint
Dual
Response
SADR
Introduction
Measurement of cognitive effort
(Bettman et al. 1986)
Configurator-task and direct questions
to measure willingness to pay
Collection of demographic and socio-economic variables
Random assignment to one discrete choice experiment
100%
100%
100%
SDR
(study 1 only)
26

27. Systematic differences of selecting no-purchase option
Choice-based
conjoint
Dual response SDR SADR
Study 1: Tablets N=214 N=203 N=219 N=208
Share of no-purchase option 22.7% 46.2% 42.2% n.a.
Extreme response behavior 1: Never no-purchase option 32.7% 9.4% 3.7% .5%
Extreme response behavior 2: Always no-purchase option 3.3% 12.8% 3.7% 5.3%
No extreme response behavior 64.0% 77.8% 92.7% 94.2%
Study 2: Basketball tickets N=160 N=146 -- N=153
Share of no-purchase option 15.8% 29.4% -- n.a.
Extreme response behavior 1: Never no-purchase option 56.3% 25.0% -- 9.5%
Extreme response behavior 2: Always no-purchase option 0.0% 0.7% -- 3.8%
No extreme response behavior 43.8% 74.3% -- 86.7%
Study 3: Video-on-Demand N=267 N=308 -- N=305
Share of no-purchase option 48.4% 67.2% -- n.a.
Extreme response behavior 1: Never no-purchase option 16.9% 5.8% -- 1.0%
Extreme response behavior 2: Always no-purchase option 17.2% 30.8% -- 6.9%
No extreme response behavior 65.9% 63.3% -- 92.2%
27
 SADR with lowest share of extreme response behavior; Separation via SDR contributes mostly to this result
 Choice-based conjoint with highest share of respondents who would always purchase
 Dual response with highest share of no-purchase option

28. Summary of study results
Studie 1
Tablets
Studie 2
Basketball tickets
Studie 3
Video-on-demand
Lowest share of extreme response
behavior
SADR SADR
SADR
Validity
Best internal validity (hit rate,
RMSE)
SADR SADR SADR
Best predictive validity (hit rate,
RMSE)
SADR, SDR SADR SADR
Best convergent validity (RMSE) n.a. SADR SADR
Best external validity (RMSE) n.a. SADR SADR
Cognitive effort
Lowest perceived difficulty No significant differences No significant differences CBC, SADR
Lowest dropout rate in discrete
choice experiment
CBC
(SADR lower dropout rates
than dual response)
CBC
(SADR lower dropout rates
than dual response)
CBC
(SADR lower dropout rates
than dual response)
Lowest duration CBC
(SADR with about equal
duration than dual response)
CBC
(SADR with about equal
duration than dual response)
CBC
(SADR with about equal
duration than dual response)
28

29. Deep dive on convergent and external validity for study 2 & 3
Study 2:
Basketball tickets
• N = 880 (customers of market leader)
• 52·4·3·2 Balanced Design
Study 1:
Tablets
• N = 459 (Fans of a major league
basketball team)
• 43 Balanced Design
Choice-
Based
Conjoint
Dual
Response
SADR
Force Choice
Questions
-- 18 18
Free Choice
Questions
18 18 9
Study 3:
Video-on-demand
Choice-
Based
Conjoint
Dual
Response
SADR
Force Choice
Questions
-- 12 12
Free Choice
Questions
12 12 6
Choice-
Based
Conjoint
Dual
Response
SDR SADR
Force Choice
Questions
-- 12 12 12
Free Choice
Questions
12 12 12 6
• N = 1,425
• 4·32·23 Balanced Design
29

30. Convergent validity – choice-based conjoint
Choice-Based Conjoint Dual Response SFFC
Study 1: Video-on-Demand
Aggregate-level comparison
Mean WTP
self-stated ↔ CBC
10.90 € ↔ 11.61 €
self-stated ↔ DR
10.30 € ↔ 8.29 €
self-stated ↔ SFFC
11.40 € ↔ 11.85 €
Median WTP 10.00 € ↔ 7.82 € 10.00 € ↔ 6.82 € 10.00 € ↔ 10.40 €
Max WTP 30.00 € ↔ 167.39 € 30.00 € ↔ 58.16 € 40.00 € ↔ 50.84 €
Study 2: Basketball Tickets
Aggregate-level comparison self-stated ↔ CBC self-stated ↔ DR self-stated ↔ SFFC
Mean WTP 24,30 € ↔ 54,58 € 23,38 € ↔ 24,78 € 25,30 € ↔ 25,52 €
Median WTP 23,00 € ↔ 28,94 € 24,00 € ↔ 20,66 € 25,00 € ↔ 23,25 €
Max WTP 60,00 € ↔ 312,41 € 60,00 € ↔ 94,47 € 70,00 € ↔ 72,15 €
A B C
No-
purchase
option
Attribute 1
Attribute 2
Attribute 3
…
30

31. Convergent validity – dual response
Choice-Based Conjoint Dual Response SFFC
Study 1: Video-on-Demand
Aggregate-level comparison
Mean WTP
self-stated ↔ CBC
10.90 € ↔ 11.61 €
self-stated ↔ DR
10.30 € ↔ 8.29 €
self-stated ↔ SFFC
11.40 € ↔ 11.85 €
Median WTP 10.00 € ↔ 7.82 € 10.00 € ↔ 6.82 € 10.00 € ↔ 10.40 €
Max WTP 30.00 € ↔ 167.39 € 30.00 € ↔ 58.16 € 40.00 € ↔ 50.84 €
Study 2: Basketball Tickets
Aggregate-level comparison self-stated ↔ CBC self-stated ↔ DR self-stated ↔ SFFC
Mean WTP 24,30 € ↔ 54,58 € 23,38 € ↔ 24,78 € 25,30 € ↔ 25,52 €
Median WTP 23,00 € ↔ 28,94 € 24,00 € ↔ 20,66 € 25,00 € ↔ 23,25 €
Max WTP 60,00 € ↔ 312,41 € 60,00 € ↔ 94,47 € 70,00 € ↔ 72,15 €
A B C
Attribute 1
Attribute 2
Attribute 3
…
Purchase most preferred Do not purchase most
preferred
31

32. Attribute 1
Attribute 2
Attribute 3
…
Attribute 1
Attribute 2
Attribute 3
…
Attribute 1
Attribute 2
Attribute 3
…
Purchase product D
Purchase product E No purchase
No purchase
Convergent validity – SADR
Choice-Based Conjoint Dual Response SFFC
Study 1: Video-on-Demand
Aggregate-level comparison
Mean WTP
self-stated ↔ CBC
10.90 € ↔ 11.61 €
self-stated ↔ DR
10.30 € ↔ 8.29 €
self-stated ↔ SFFC
11.40 € ↔ 11.85 €
Median WTP 10.00 € ↔ 7.82 € 10.00 € ↔ 6.82 € 10.00 € ↔ 10.40 €
Max WTP 30.00 € ↔ 167.39 € 30.00 € ↔ 58.16 € 40.00 € ↔ 50.84 €
Study 2: Basketball Tickets
Aggregate-level comparison self-stated ↔ CBC self-stated ↔ DR self-stated ↔ SFFC
Mean WTP 24,30 € ↔ 54,58 € 23,38 € ↔ 24,78 € 25,30 € ↔ 25,52 €
Median WTP 23,00 € ↔ 28,94 € 24,00 € ↔ 20,66 € 25,00 € ↔ 23,25 €
Max WTP 60,00 € ↔ 312,41 € 60,00 € ↔ 94,47 € 70,00 € ↔ 72,15 €
32

33. Comparison of demand functions against the one derived from self-
stated willingness to pay
33
Study 2: Basketball Tickets Study 3: Video-on-Demand
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
5 € 7 € 9 € 11 € 13 € 15 € 17 € 19 € 21 €
Shareofcustomerspurchasingatpricep
Price for the self-customized VoD plan
Choice-Based Conjoint
Dual Response
SADR
Directly stated
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
9 € 14 € 19 € 24 € 29 €
Shareofcustomerspurchasingatpricep
Price for the self-customized basketball ticket
Choice-Based Conjoint
Dual Response
SADR
Directly Stated

34. External validity
Study 2 – basketball tickets
Approach
• Comparison 1: Comparison of actual and predicted choice proportions in four ticket categories
in season before and after study
• Comparison 2: Comparison of actual and predicted number of viewers after price increase of 2 €
between seasons
NOTE: Price categories were sold out in only 8.09 % of all games
CBC Dual Response SADR
Choice proportions in four price categories N=160 N=146 N=153
RMSE season before study .099 .095 .059
RMSE season after study .102 .098 .061
Change in number of viewers after price increase
RMSE .041 .038 .034
34

35. External validity
Study 3 – video-on-demand
“with reference to external validity, (…) one should measure the attributes of real choice alternatives (e.g.,
real brands) faced by each subject and observe their reported (…) most recent choice” (Batsell and Louviere
1991)
 Comparison of each subject’s self-reported answer, whether they previously purchased VoDs and how
much they paid for them on average.
Choice-Based Conjoint Dual Response SADR
N=267 N=308 N=305
stated ↔ predicted stated ↔ predicted stated ↔ predicted
Share of Paying Customers 67.04% ↔ 40.82% 67.86% ↔ 29.54% 69.18% ↔ 62.95%
RMSE 0.55 0.59 0.50
35

36. Summary
 SDR and especially SADR with unique features to better measure willingness to pay
 Unique feature of SDR & SADR:
 Avoidance of context effects through strict separation of forced and free choice questions into two blocks
 Unique additional features of SADR:
 Avoidance of extreme response behavior through adaptive free choice questions
 Independence between purchase probability and accuracy in measuring willingness to pay through selecting free
choice alternatives from the whole range of the preference order
 Reduction of number of redundant purchase questions (about 20% less effort)
 Empirical findings
 SADR offers higher internal predictive, convergent, and external validity; large parts of increase in predictive validity
stem from the separation feature as implemented in SDR
 SADR requires less cognitive effort than Dual Response, but respondents spend the same amount of time
 Better "balanced“ and more informative decisions than in choice-based conjoint and dual response
36

37. Thank you for your attention!
Christian Schlereth
Chair of Digital Marketing
WHU – Otto Beisheim School of
Management
+49 (0) 261 6509 455
+49 (0) 261 6509 509
christian.schlereth@whu.edu
Bernd Skiera
Chair of Electronic Commerce
Department of Marketing
Goethe University Frankfurt
+49 (0) 69798 34649
+49 (0) 69798 35001
skiera@skiera.de
37
Demo: http://www.dise-online.net/demo.aspx

38. Implementation of SDR and SADR in DISE (Dynamic Intelligent Survey Engine)
Part 1: forced choice block
38
<predefinedPages markID="1003">
<cbc percentageStart="25" percentageEnd="60">
<choiceSetQuestion>Which of the tablets would you prefer most?</choiceSetQuestion>
<attributes>
<attribute>
<name>Brand and operating system</name>
<isNominal />
<levels>
<level><text>Apple (iOS)</text><baseValue>150</baseValue></level>
<level><text>Samsung (Android)</text><baseValue>50</baseValue></level>
<level><text>Smarttab (Android)</text><baseValue>0</baseValue></level>
</levels>
</attribute>
<attribute>
<name>Screen size</name>
<isNominal />
<levels>
<level><text>7 inch</text></level>
<level><text>10 inch</text></level>
</levels>
</attribute>
...
</attributes>
<cbcDesign>
1,1,1,2,2,4;
3,2,2,1,1,3;
...
</cbcDesign>
<configuration>
<noChoiceSetsPerPage>1</noChoiceSetsPerPage>
<noProductsPerChoiceSet>3</noProductsPerChoiceSet>
<hasNoChoice>false</hasNoChoice>
<noSortedCompleteFactorialDesign>false</noSortedCompleteFactorialDesign>
</configuration>
</cbc>
</predefinedPages>
Specify all attributes and levels
(here, a brand specific base price
is specified)
Include choice design
Specify number of alternatives
per choice set as well that choice
sets contain forced choice
questions, i.e., without a no-
purchase option
Assign ID “1003“ to forced choice
block
SDR & SADR – Separated (adaptive) dual response
Demo: http://www.dise-online.net/demo.aspx

39. Implementation of SDR and SADR in DISE (Dynamic Intelligent Survey Engine)
Part 2: free choice block
39
<predefinedPages>
<freeChoiceBlock percentageStart="65" percentageEnd="90">
<question>Would you actually buy the presented tablet?</question>
<configuration>
<cbcMarkID>1003</cbcMarkID>
<noAttributesInCbc>6</noAttributesInCbc>
<presentSelectedCbcProducts>true</presentSelectedCbcProducts>
</configuration>
</freeChoiceBlock>
</predefinedPages>
<predefinedPages>
<freeChoiceBlock percentageStart=“65“ percentageEnd="90">
<question>Would you actually buy the presented tablet?</question>
<configuration>
<cbcMarkID>1003</cbcMarkID>
<noAttributesInCbc>6</noAttributesInCbc>
<noQuestionsPerIteration>2</noQuestionsPerIteration>
<noIterations>3</noIterations>
</configuration>
</freeChoiceBlock>
</predefinedPages>
SDR – Separated dual response
SADR – Separated adaptive dual response
Create link to forced choice block
Use mechanism that just shows
the chosen alternatives from
forced choice block
Create link to forced choice block
Assign n = 2 and m = 3
Demo: http://www.dise-online.net/demo.aspx