In
behavioral economics, willingness to pay (WTP) is the maximum
price at or below which a
consumer will definitely buy one unit of a
product.[1] This corresponds to the standard economic view of a consumer
reservation price. Some researchers, however, conceptualize WTP as a range.
According to the constructed preference view, consumer willingness to pay is a context-sensitive construct; that is, a consumer's WTP for a product depends on the concrete decision context. For example, consumers tend to be willing to pay more for a soft drink in a luxury hotel resort in comparison to a beach bar or a local retail store.
^Varian, Hal R. (1992), Microeconomic Analysis, Vol. 3. New York: W.W. Norton.
Further reading
Anderson, James C., Dipak Jain, and Pradeep K. Chintagunta (1993), "Understanding Customer Value in Business Markets: Methods of Customer Value Assessment," Journal of Business-to-Business Marketing, 1 (1), 3–30.