Undergraduate Honors Theses

Thesis Defended

Spring 2016

Document Type

Thesis

Type of Thesis

Departmental Honors

Department

Economics

First Advisor

Dr. Donald Waldman

Abstract

This research examines how advertisement attributes are received by consumers. Six advertisement attributes in the smartphone applications market are studied using a survey of university students. Respondents answer a series of choice experiments. Parameters of a random utility model are estimated by conditional logit to determine a consumer’s willingness- to-pay to avoid disruptive advertisement attributes within a smartphone application. The results show that a consumer is willing to pay $4.06 to avoid targeted ads, $0.28 to decrease the frequency of the ads when graphics are static, $2.71 to decrease the frequency of ads when graphics are animated, $1.30 to avoid ads with animated graphics, and $3.73 to avoid animated graphics when paired with the mean ad frequency level of 2.5, or 45 seconds. The results of this study are useful for app developers seeking to monetize their product without alienating users and for companies who aim to create and use an advertisement that does not decrease a consumer’s willingness-to-pay for their product.

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