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CBC analysis and price interactions

Hi!

I am puzzled by the interaction terms in conjoint analysis and especially how price affects other attributes. In my previous studies I have understood that it is important for analysis part to think and consider the attributes as such that they measure only their own utility and not affect other attributes that take place in CA (for example the interaction between brand price you discussed in one of the sawtooth papers).

However, if you think it through, price affects usually all the possible decision making. If for example I want to decide between two cars with three attributes -price,  safety rating, gasoline consumption - with higher price I want more or better in all the categories usually no matter what they are. So if I normally consider that I need only 3-star rating in safety and want as fuel efficient car as possible then suddenly when the price is higher the 3-star safety and max-fuel efficiency isn't enough anymore but I want more for my money. So money influences my decision making.

Are there any academic paper out there that discuss this? Or am I completely out of track? How would one analyze utility in these type of survey when the dependend variable and all independent variables rely on one independent variable? How can I see what is the true importance of safety and gasoline consumption if they both depend on the price?

Thank you for your time!
asked Mar 2 by alexandra

1 Answer

0 votes
Is this really a case of an interaction?  I think this can all be explained with main effects.  For example, say the low price has a utility of 1.3 and at the high price has a utility of -2.6.  This doesn't suggest that the value of a feature (say fuel efficiency) is more or less important.  What it does suggest, however, is that to make the more expensive car as appealing as the cheaper one, we might need to have greater fuel efficiency.  So instead of 21 MPG (which has a lower utility) we might need the higher-utility level of 42 MPG).  And we might need to see some improvements in safety rating (higher-utility 4 stars rather than lower utility 2 stars).  And so on.  None of this need involve any interactions at all - main effects could do all the work.  

I'm not suggesting that there will be no interactions, but I am suggesting that there is no necessity that you will see interactions or that you should expect to see significant interactions.  They are not needed to perform the function of improving the appeal of an expensive vehicle.
answered Mar 6 by Keith Chrzan Platinum Sawtooth Software, Inc. (65,075 points)
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