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

Author

Listed:
  • 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 effect 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 effect, 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.

Suggested Citation

  • 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.
    • Handle: RePEc:jrp:jrpwrp:2013-032
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Greiff, Matthias & Egbert, Henrik, 2016. "A Survey of the Empirical Evidence on PWYW Pricing," MPRA Paper 68693, University Library of Munich, Germany.
    2. Gerpott, Torsten J. & Schneider, Christina, 2016. "Buying behaviors when similar products are available under pay-what-you-want and posted price conditions: Field-experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 135-145.
    3. Egbert, Henrik, 2017. "The Gift and Pay-What-You-Want Pricing," MPRA Paper 82066, University Library of Munich, Germany.
    4. Krämer, Florentin & Schmidt, Klaus M. & Spann, Martin & Stich, Lucas, 2017. "Delegating pricing power to customers: Pay What You Want or Name Your Own Price?," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 125-140.
    5. Greiff, Matthias & Egbert, Henrik, 2016. "The Pay-What-You-Want Game and Laboratory Experiments," MPRA Paper 75222, University Library of Munich, Germany.
    6. Samahita Margaret, 2020. "Pay-What-You-Want in Competition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(1), pages 1-16, January.
    7. Armstrong Soule, Catherine A. & Madrigal, Robert, 2015. "Anchors and norms in anonymous pay-what-you-want pricing contexts," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 167-175.
    8. Anna Kukla-Gryz & Peter Szewczyk & Katarzyna Zagórska, 2018. "Do cultural differences affect voluntary payment decisions? Evidence from guided tours," Working Papers 2018-06, Faculty of Economic Sciences, University of Warsaw.
    9. 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.
    10. Anna Kukla-Gryz & Katarzyna Zagórska, 2017. "The strength of the anchoring effect on Pay What You Want payments: Evidence from a vignette experiment," Working Papers 2017-14, Faculty of Economic Sciences, University of Warsaw.

    More about this item

    Keywords

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

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • P14 - Economic Systems - - Capitalist Systems - - - Property Rights

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