3.3. Estimation of demand function and WTP
Based on the above WTP of each user, we estimate the demand function of the system;
more precisely, we estimate the probability of acceptance to amounts questioned and the
number of users who will agree to pay. The functional form of demand to be
estimated is assumed to be logistic, namely,
Probability of acceptance = 1- 1/(1 + exp (-a -ß logWTP)).
The probability of acceptance is the ratio of the number of users who reply that they are
willing to use the device at the amount of charges provided in the questions. The
estimated coefficientsa andß are summarized in Table 3.