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Voluntary Payments, Privacy and Social Pressure on the Internet: A Natural Field Experiment

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  • Tobias Regner

    ()
    (Max Planck Institute for Economics, Jena)

  • Gerhard Riener

    ()
    (Duesseldorf Institute for Competition Economics (DICE))

Abstract

The emergence of Pay-What-You-Want (PWYW) business models as a successful alternative to conventional uniform pricing brings up new questions related to the task of pricing. We investigate the eect of a reduction of privacy on consumers' purchase decisions (whether to buy, and if so how much to pay) in a natural experiment at an online music store with PWYW-like pricing. Our study extends the empirical evidence of the reduced anonymity eect, previously established for donation or public goods contexts, to a consumption environment. We nd that revealing the name of the customer led to slightly higher payments, while it drastically reduced the number of customers purchasing. Overall, the regime led to a revenue loss of 15%. The experiment suggests that even low levels of social pressure without face to face interaction on customers leads to a reduction of welfare.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2013-032.

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Date of creation: 09 Sep 2013
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Handle: RePEc:jrp:jrpwrp:2013-032

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Keywords: Digital content; Voluntary Payments; PWYW; Public goods; Voluntary contributions; Social pressure; Internet; Privacy; Natural experiment;

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  12. James Andreoni & Justin M. Rao & Hannah Trachtman, 2011. "Avoiding The Ask: A Field Experiment on Altruism, Empathy, and Charitable Giving," NBER Working Papers 17648, National Bureau of Economic Research, Inc.
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Cited by:
  1. 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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