We describe new automated procedures in Sawtooth Software’s market simulator for estimating Willingness to Pay (WTP) in a more appropriate and realistic way than either the common algebraic approach or the two-product simulation approach that don’t consider competition. We simulate the firm’s product versus either fixed competitors or repeated sampling across varying competitors, finding the indifference price that drives the firm’s share back to the share prior to enhancement. We use bootstrap sampling to develop confidence intervals.
