A new twist on a decades-old analytic technique promises to give marketers a better tool for measuring their customers' willingness to pay (WTP), outperforming common survey-based methods. That's according to a forthcoming Marketing Science Institute working paper by Klaus Wertenbroch and Bernd Skiera, who introduce the procedure and explain how they tested it.To use the process, researchers first ask consumers at the point of sale to state the most they would pay for a particular product. Then the product's price is set at random — for example, by having someone draw a ticket marked with a price. Participants who offered more than the amount drawn have to use their own money to purchase the product at the randomly determined price. Individuals who offer less have no chance to buy. The authors label the new approach BDM, after social scientists Gordon Becker, Morris DeGroot and Jacob Marschak, who invented a similar method in the 1960s to evaluate attitudes toward risk.I
