Pay What You Want – But Pay Enough! Information Asymmetries and PWYW Pricing
Pay 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.
|Date of creation:||12 Dec 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Schmidt, Klaus M. & Spann, Martin & Zeithammer, Robert, 2012.
"Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets,"
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
393, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Klaus Schmidt & Martin Spann & Robert Zeithammer, 2014. "Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets," CESifo Working Paper Series 5069, CESifo Group Munich.
- 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.
- Buchheit, Steve & Feltovich, Nick, 2010.
"Experimental evidence of a sunk–cost paradox: a study of pricing behavior in Bertrand–Edgeworth duopoly,"
SIRE Discussion Papers
2010-124, Scottish Institute for Research in Economics (SIRE).
- Steve Buchheit & Nick Feltovich, 2011. "Experimental Evidence Of A Sunk‐Cost Paradox: A Study Of Pricing Behavior In Bertrand–Edgeworth Duopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(2), pages 317-347, 05.
- 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.
- Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
- Kim Ju-Young & Natter Martin & Spann Martin, 2010. "Kish: Where Customers Pay As They Wish," Review of Marketing Science, De Gruyter, vol. 8(2), pages 1-14, July.
- Tobias Regner & Javier A. Barria, 2009.
"Do Consumers Pay Voluntarily? The Case of Online Music,"
- 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.
- Tobias Regner & Javier A. Barria, 2007. "Do Consumers Pay Voluntarily? The Case of Online Music," Jena Economic Research Papers 2007-011, Friedrich-Schiller-University Jena.
- C. Monica Capra & Shireen Meer & Kelli Lanier, 2006.
"The Effects of Induced Mood on Bidding in Random N-th Price Auctions,"
0607, Department of Economics, Emory University (Atlanta).
- Capra, C. Monica & Lanier, Kelli F. & Meer, Shireen, 2010. "The effects of induced mood on bidding in random nth-price auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 223-234, August.
- Nick Feltovich, 2011. "The Effect of Subtracting a Constant from all Payoffs in a Hawk-Dove Game: Experimental Evidence of Loss Aversion in Strategic Behavior," Southern Economic Journal, Southern Economic Association, vol. 77(4), pages 814-826, April.
- Simon Gächter & Arno Riedl, 2005.
"Moral Property Rights in Bargaining with Infeasible Claims,"
INFORMS, vol. 51(2), pages 249-263, February.
- Simon G�chter & Arno Riedl, 2003. "Moral Property Rights in Bargaining with Infeasible Claims," Tinbergen Institute Discussion Papers 03-055/1, Tinbergen Institute.
- Bolton, Lisa E & Warlop, Luk & Alba, Joseph W, 2003. " Consumer Perceptions of Price (Un)Fairness," Journal of Consumer Research, Oxford University Press, vol. 29(4), pages 474-91, March.
- 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.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:52766. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.