Willingness to Pay (WTP) and Market Simulation
Channel: John Helveston
Date: 2021-11-05

In this lecture, I discuss how we use estimated utility model coefficients to compute willingness to pay (WTP) and simulate market shares for different markets. I also show how to use draws of the model coefficients to incorporate uncertainty into the WTP and market share calculations.

00:14 - Background: Utility model and maximum likelihood estimation
00:49 - Willingness to pay (WTP)
02:31 - Model space: Preference vs. WTP
03:28 - Market share prediction
08:38 - Summary of market share prediction in R
09:20 - Practice question 1
10:15 - Using draws of a normal distribution to represent uncertainty
11:28 - Using draws to compute a confidence interval around WTP
13:20 - Using draws to compute a confidence interval around market share predictions
14:36 - Practice question 2