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Pushed by the crowd or pulled by the leaders? Peer effects in Pay-What-You-Want

Author

Listed:
  • Michal Krawczyk

    (Faculty of Economic Sciences, University of Warsaw)

  • Anna Kukla-Gryz

    (Faculty of Economic Sciences, University of Warsaw)

  • Joanna Tyrowicz

    (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland)

Abstract

Literature on charitable giving often finds that seed money matters: the example of a wealthy donor is followed by others (List and Lucking-Riley, 2002). Nearly all relevant theoretical accounts (e.g. that leaders possess superior information on quality of the project) seem to apply to the closely related environment of Pay-What-You-Want mechanisms as well. Yet, as far as we can tell, no empirical study has tested for that until now. To fill this gap, we analyze data from 16 campaigns of BookRage (an equivalent of Humble Bundle, offering bundles of e-books). We make use of the fact that a fixed number of currently highest contributions are always displayed (along with mean contribution and total amount raised). Thus a discontinuity may be expected: contributions that are displayed might directly affect subsequent donors' behavior, in contrast to just slightly lower donations that are only observable as a (small) change in mean contribution. We find that the example of leaders makes no impact on willingness to purchase and amount paid. By contrast, the mean of past contributions has a positive impact on current contribution, yet a negative impact on the probability of contributing.

Suggested Citation

  • Michal Krawczyk & Anna Kukla-Gryz & Joanna Tyrowicz, 2015. "Pushed by the crowd or pulled by the leaders? Peer effects in Pay-What-You-Want," Working Papers 2015-25, Faculty of Economic Sciences, University of Warsaw.
  • Handle: RePEc:war:wpaper:2015-25
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    References listed on IDEAS

    as
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    Cited by:

    1. Matthias Greiff & Henrik Egbert, 2016. "A Survey of the Empirical Evidence on PWYW Pricing," Bulgarian Economic Papers bep-2016-02, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Jan 2016.
    2. Greiff, Matthias & Egbert, Henrik, 2016. "The Pay-What-You-Want Game and Laboratory Experiments," MPRA Paper 75222, University Library of Munich, Germany.
    3. 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.

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    More about this item

    Keywords

    voluntary contribution; cultural goods; PWYW;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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