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Norms, moods, and free lunch: Longitudinal evidence on payments from a Pay-What-You-Want restaurant

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Author Info

  • Riener, Gerhard
  • Traxler, Christian

Abstract

We study the distribution and evolution of payments in a Pay-What-You-Want restaurant. Despite missing price tags and despite the option to pay nothing at all, we observe that the vast majority of guests makes strictly positive payments. Over the two years covered by our data, average payments decline slightly, converging at a positive level. At the same time, the number of daily guests increases steadily, resulting in a considerable increase in total revenues. We discuss one possible interpretation of the long-term trend in payments in terms of social norms. We further show that short-term fluctuations in average payments are partly explained by exogenous weather changes. We provide evidence that – in line with work in psychology – weather-induced changes in mood affect payments.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 41 (2012)
Issue (Month): 4 ()
Pages: 476-483

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Handle: RePEc:eee:soceco:v:41:y:2012:i:4:p:476-483

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Web page: http://www.elsevier.com/locate/inca/620175

Related research

Keywords: Pay-What-You-Want; Moods; Weather; Social norms;

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References

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  1. David Hirshleifer & TYLER G. SHUMWAY, 2004. "Good Day Sunshine: Stock Returns and the Weather," Finance 0412004, EconWPA.
  2. Azar, Ofer H., 2004. "What sustains social norms and how they evolve?: The case of tipping," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 49-64, May.
  3. Alessandro Balestrino & Cinzia Ciardi, 2007. "Social Norms, Cognitive Dissonance and the Timing of Marriage," CESifo Working Paper Series 2068, CESifo Group Munich.
  4. Kirchsteiger, Georg & Rigotti, Luca & Rustichini, Aldo, 2006. "Your morals might be your moods," Journal of Economic Behavior & Organization, Elsevier, vol. 59(2), pages 155-172, February.
  5. López-Pérez, Raúl, 2009. "Followers and leaders: Reciprocity, social norms and group behavior," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(4), pages 557-567, August.
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  7. Traxler, Christian, 2010. "Social norms and conditional cooperative taxpayers," European Journal of Political Economy, Elsevier, vol. 26(1), pages 89-103, March.
  8. Gerald J. Pruckner & Rupert Sausgruber, 2008. "Honesty on the Streets - A Natural Field Experiment on Newspaper Purchasing," Working Papers 2009-24, Faculty of Economics and Statistics, University of Innsbruck.
  9. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
  10. Saunders, Edward M, Jr, 1993. "Stock Prices and Wall Street Weather," American Economic Review, American Economic Association, vol. 83(5), pages 1337-45, December.
  11. George A. Akerlof, 1978. "A theory of social custom, of which unemployment may be one consequence," Special Studies Papers 118, Board of Governors of the Federal Reserve System (U.S.).
  12. Ofer H. Azar, 2005. "Why pay extra? Tipping and the importance of social norms and feelings in economic theory," Microeconomics 0503005, EconWPA.
  13. Steven D. Levitt, 2006. "White-Collar Crime Writ Small: A Case Study of Bagels, Donuts, and the Honor System," American Economic Review, American Economic Association, vol. 96(2), pages 290-294, May.
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Citations

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Cited by:
  1. Schmidt, Klaus M. & Spann, Martin & Zeithammer, Robert, 2012. "Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets," Discussion Papers in Economics 14308, University of Munich, Department of Economics.
  2. Greiff, Matthias & Egbert, Henrik & Xhangolli, Kreshnik, 2013. "Pay What You Want – But Pay Enough! Information Asymmetries and PWYW Pricing," MPRA Paper 52766, University Library of Munich, Germany.
  3. Tobias Regner & Gerhard Riener, 2013. "Voluntary Payments, Privacy and Social Pressure on the Internet: A Natural Field Experiment," Jena Economic Research Papers 2013-032, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  4. Christina Gravert, 2014. "Pride and Patronage - The effect of identity on pay-what-you-want prices at a charitable bookstore," Economics Working Papers 2014-04, School of Economics and Management, University of Aarhus.
  5. Egbert, Henrik & Greiff, Matthias & Xhangolli, Kreshnik, 2014. "PWYW Pricing ex post Consumption: A Sales Strategy for Experience Goods," MPRA Paper 53376, University Library of Munich, Germany.

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