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The role of external reference price in pay-what-you-want pricing: An empirical investigation across product types

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  • Weisstein, Fei L.
  • Choi, Pilsik
  • Andersen, Peter

Abstract

This research aims to investigate the effectiveness of the adoption of external reference price (ERP) in influencing consumers' pay-what-you-want (PWYW) final payments across different product types. Results from two experiments show the effectiveness of using ERP as an anchor heavily depends on the nature of the product category. For hedonic products, the absence of an ERP, compared to the presence of one, leads to higher perceived quality and PWYW payments. The results are the opposite for utilitarian products. This study contributes to PWYW literature by investigating how product types affect consumers’ perceived quality of the product offered and their PWYW payments.

Suggested Citation

  • Weisstein, Fei L. & Choi, Pilsik & Andersen, Peter, 2019. "The role of external reference price in pay-what-you-want pricing: An empirical investigation across product types," Journal of Retailing and Consumer Services, Elsevier, vol. 50(C), pages 170-178.
    • Handle: RePEc:eee:joreco:v:50:y:2019:i:c:p:170-178
    DOI: 10.1016/j.jretconser.2019.05.017
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    4. Narwal, Preeti & Rai, Shivam, 2022. "Individual differences and moral disengagement in Pay-What-You-Want pricing," Journal of Business Research, Elsevier, vol. 149(C), pages 528-547.
    5. Emili Vizuete-Luciano & Oktay Güzel & José M. Merigó, 2023. "Bibliometric research of the Pay-What-You-Want Topic," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(5), pages 413-426, October.
    6. Vaidyanathan, Rajiv & Aggarwal, Praveen, 2020. "Does MSRP impact women differently? Exploring gender-based differences in the effectiveness of retailer-provided reference prices," Journal of Retailing and Consumer Services, Elsevier, vol. 54(C).
    7. Hsin‐Hui Lin & Pin‐Han Chen & Chih‐Lun Wu, 2023. "Exploring the price anchoring effect in mobile commerce: An experimental study," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1601-1623, April.
    8. Cabano, Frank G. & Attari, Amin, 2023. "Don’t tell me how much to tip: The influence of gratuity guidelines on consumers’ favorability of the brand," Journal of Business Research, Elsevier, vol. 159(C).
    9. Di Domenico, Giandomenico & Premazzi, Katia & Cugini, Antonella, 2022. "“I will pay you more, as long as you are transparent!”: An investigation of the pick-your-price participative pricing mechanism," Journal of Business Research, Elsevier, vol. 147(C), pages 403-419.
    10. Narwal, Preeti & Nayak, J.K., 2020. "How consumers form product quality perceptions in absence of fixed posted prices: Interaction of product cues with seller reputation and third-party reviews," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).

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