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Buyer Behavior in Pay-What-You-Want Pricing

In: New Directions in Behavioral Pricing

Author

Listed:
  • Lucas Stich
  • Martin Spann

Abstract

Pay-What-You-Want (PWYW) pricing delegates full control over the price to prospective buyers. Contrary to the rational self-interest prediction that all buyers will take the product and pay nothing, field applications of PWYW show that many buyers do not exploit this control but pay positive prices voluntarily. In this chapter, we discuss three key theoretical accounts that explain buyer behavior in PWYW pricing settings. Based on these theoretical accounts, we discuss implications for the design and effectiveness of PWYW as a pricing mechanism. In addition, we discuss opportunities for future research and practice.

Suggested Citation

  • Lucas Stich & Martin Spann, 2024. "Buyer Behavior in Pay-What-You-Want Pricing," World Scientific Book Chapters, in: Chezy Ofir (ed.), New Directions in Behavioral Pricing, chapter 5, pages 117-141, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811292231_0005
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    More about this item

    Keywords

    New Currencies; Loyalty Program Miles as a Virtual Currency; Uncertainty in Value; Choice of Payment Mode; Loyalty Program Management; Affective Price Evaluations; Pain of Paying ; Metacognitive Experience In Price Evaluation; The Ease-of-Recall Pricing Effect; The Ease-of-Computation Effect; Hedonic Price Evaluations; Price Fairness; Dual Entitlement; Communicating Price Changes; Communicating Price Differences; Internal Reference Price; Gain–Loss Asymmetry; Price Thresholds; Processing Price Information; Framing Price Changes; Framing Price Differences; Buyers' Purchase Goals; Round Versus Sharp (Odd) Prices; Price Promotion Information Processing; Ease of Computing Price Differences; Size of Right Digit Endings; Absolute Versus Relative Price Differences; Communicating Price Differences; Effects on Quality Inferences And Internal Reference Prices; Post-Promotion Price Expectations; Perceived Fairness of Price Promotions; Pay-What-You-Want (PWYW); Social Preferences; Models of Finitely Repeated Games with Incomplete Information; Signaling; Self-Signaling; Social Signaling; Social Preferences; Partitioned Pricing; Bargains; Efficiency Frontier;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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