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Calculate WTP with the help of linear interpolation

Dear forum members,

does anyone have experience with calculating WTP by using linear interpolation between the price levels? I followed the approach of a paper using this approach.

I am calculating the utility of the product with the attribute levels of my choice by summing up the part-worth utilities (without price) and subtract it from the utility of the non-choice option. Then I take this value as y-value and search for the related x-value of my function (consisting of 5 price levels as x-values und the 5 part-worth utilities of the price levels as y-values) with linear interpolation (on a respondent level).

For many respondents I get reasonable results. But for some respondents the y-value, I search for (the utility of a certain price), is not among the given utility values of the 5 price levels. Hence, I cannot interpolate. Does that mean, that the WTP is zero? Or simply not determinable?

Thank you in advance for your help.

Best,
Mary
asked Aug 19 by Mary (340 points)

1 Answer

0 votes
Mary,

I'm a little confused by your description of your method.  This paper describes both a standard algebraic calculation of WTP as well as what we believe is a better simulation-based measure:  https://sawtoothsoftware.com/support/technical-papers/general-conjoint-analysis/assessing-the-monetary-value-of-attribute-levels-with-conjoint-analysis-warnings-and-suggestions-2001
answered Aug 21 by Keith Chrzan Platinum Sawtooth Software, Inc. (77,750 points)
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