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

  • Tobias Regner


    (Max Planck Institute for Economics, Jena)

  • Gerhard Riener


    (Duesseldorf Institute for Competition Economics (DICE))

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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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2013-032.

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Date of creation: 09 Sep 2013
Date of revision:
Handle: RePEc:jrp:jrpwrp:2013-032
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  1. Cremer, Helmuth & Pestieau, Pierre, 2006. "Piracy Prevention and the Pricing of Information Goods," CEPR Discussion Papers 5556, C.E.P.R. Discussion Papers.
  2. Vincent Conitzer & Curtis R. Taylor & Liad Wagman, 2012. "Hide and Seek: Costly Consumer Privacy in a Market with Repeat Purchases," Marketing Science, INFORMS, vol. 31(2), pages 277-292, March.
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  6. Regner, Tobias & Barria, Javier A., 2009. "Do consumers pay voluntarily? The case of online music," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 395-406, August.
  7. Riener, Gerhard & Traxler, Christian, 2012. "Norms, moods, and free lunch: Longitudinal evidence on payments from a Pay-What-You-Want restaurant," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 476-483.
  8. Charness, Gary & Gneezy, Uri, 2008. "What's in a name? Anonymity and social distance in dictator and ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 29-35, October.
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  10. Alastair R. Beresford & Dorothea Kübler & Sören Preibusch, 2011. "Unwillingness to Pay for Privacy: A Field Experiment," SFB 649 Discussion Papers SFB649DP2011-010, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
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  12. James Andreoni & Ragan Petrie, 2003. "Public Goods Experiments Without Confidentiality: A Glimpse Into Fund-Raising," Levine's Working Paper Archive 506439000000000520, David K. Levine.
  13. Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2008. "Anonymity, reciprocity, and conformity: Evidence from voluntary contributions to a national park in Costa Rica," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1047-1060, June.
  14. Domon, Koji & Yamazaki, Naoto, 2004. "Unauthorized file-sharing and the pricing of digital content," Economics Letters, Elsevier, vol. 85(2), pages 179-184, November.
  15. Tobias Regner, 2010. "Why Consumers Pay Voluntarily: Evidence from Online Music," Jena Economic Research Papers 2010-081, Friedrich-Schiller-University Jena, revised 10 Dec 2014.
  16. 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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