Pay What You Want – But Pay Enough! Information Asymmetries and PWYW Pricing
AbstractPay What You Want (PWYW) pricing has received considerable attention recently. Empirical studies show that when PWYW pricing is implemented buyers do not behave selfishly in a number of cases and that some sellers are able to use PWYW to increase turnover as well as profits. In this paper we present a theoretical model of buyer behavior under asymmetric information about production costs. Our model shows that information asymmetries provide an explanation for the results found in empirical studies.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 52766.
Date of creation: 12 Dec 2013
Date of revision:
PWYW pricing; information asymmetry; fairness; buyer behavior;
Other versions of this item:
- Matthias Greiff & Henrik Egbert & Kreshnik Xhangolli, 2013. "Pay What You Want – But Pay Enough! Information Asymmetries and PWYW-Pricing," MAGKS Papers on Economics 201304, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- D4 - Microeconomics - - Market Structure and Pricing
- M2 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics
- M3 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-01-10 (All new papers)
- NEP-CTA-2014-01-10 (Contract Theory & Applications)
- NEP-EXP-2014-01-10 (Experimental Economics)
- NEP-HME-2014-01-10 (Heterodox Microeconomics)
- NEP-MIC-2014-01-10 (Microeconomics)
- NEP-MKT-2014-01-10 (Marketing)
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