Flexible Functional Form Estimation of Willingness to Pay Using Dichotomous Choice Data

This paper introduces fully flexible (semi-nonparametric) methods for calculating willingness to pay (WTP) bounded between zero and the respondentʹs income for dichotomous choice contingent valuation. A method to estimate median WTP using fully flexible functional forms is also presented. Finally, the numerical illustration demonstrates the importance of considering Jensenʹs Inequality in calculating WTP with nonlinear models