Getting the price right is essential for successful new product introductions. An accurate estimate of consumers' willingness to pay is a crucial part of this task. Measurement of willingness to pay for innovations, however, often yields biased results. In this paper, we investigate consumer‐related characteristics and motives that might underlie this bias. Drawing on the elaboration likelihood model, we develop a conceptual model to identify consumer characteristics relevant for preference measurement for innovative products. In doing so, two main factors that potentially influence hypothetical bias are distinguished: ability and motivation. Our conceptual discussion and empirical results demonstrate that the validity of willingness to pay statements is higher among consumers who show a high ability to assess the new product's utility and who are truly interested in purchasing the new product. Counter to intuition, willingness to pay statements from innovators, consumers with good product category knowledge, or consumers who perceive the new product to be highly innovative are relatively more biased and should be interpreted with caution. This research is among the first to look at consumer characteristics rather than methodological issues when it comes to measuring consumer willingness to pay for innovative products. Our conceptual discussion and empirical examination of the drivers of hypothetical bias can be used to refine the validity of the results of the direct willingness to pay approach. These findings should help improve new product pricing surveys and open new avenues for research in measuring consumer preferences.
Over the past few years, regulators have begun to consider restricting a cookie's lifetime or even banning cookies altogether as a way to protect consumer privacy. Most of this debate has taken place in the absence of any quantified cost-benefit analysis. To begin to fill this gap in the discourse, we estimate the potential economic damage of lifespan restrictions on cookies. Our analysis is based on an empirical study on cookies of 54,127 users who received about 130 million ad impressions over 2.5 years. Only 22% of all cookies increase their daily value over time but the value of that quantile represent 61% of the value of all cookies. This analysis suggests that restricting their lifetime to one year as the European Union proposes (two years as Google advocates) decreases cookie lifetime value by 14.8% (5.9%), which represents a decrease in the value of all cookies of about 7.4% (1.3%). Overall, we find that the average lifetime of a cookie is 215 days (median 68 days) and the average value of a cookie is €1.43 (median €.02).
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