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The Pay-What-You-Want Game and Laboratory Experiments

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  • Greiff, Matthias
  • Egbert, Henrik

Abstract

This paper introduces the Pay-What-You-Want game which represents the interaction between a buyer and a seller in a Pay-What-You-Want (PWYW) situation. The PWYW game embeds the dictator game and the trust game as subgames. This allows us to use previous experimental studies with the dictator and the trust game to identify three factors that can influence the success of PWYW pricing in business practice: (i) social context, (ii) social information, and (iii) deservingness. Only few cases of PWYW pricing for a longer period of time have been documented. By addressing repeated games, we isolate two additional factors which are likely to contribute to successful implementations of PWYW as a long term pricing strategy. These are (iv) communication and (v) the reduction of goal conflicts. The central implication of this study is that the results from experimental economics can provide guidance to developing long-term applications of PWYW pricing.

Suggested Citation

  • Greiff, Matthias & Egbert, Henrik, 2016. "The Pay-What-You-Want Game and Laboratory Experiments," MPRA Paper 75222, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:75222
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    File URL: https://mpra.ub.uni-muenchen.de/75222/1/MPRA_paper_75222.pdf
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    References listed on IDEAS

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    Cited by:

    1. Egbert, Henrik, 2017. "The Gift and Pay-What-You-Want Pricing," MPRA Paper 82066, University Library of Munich, Germany.
    2. Elisa Hofmann & Deliah Bolesta & Aya Adra, 2023. "Immorality Judgments and Framing Effects in Voluntary Payment Settings," Jena Economics Research Papers 2023-010, Friedrich-Schiller-University Jena.

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    More about this item

    Keywords

    Pay-What-You-Want; PWYW Game; participative pricing; experiments; reciprocity;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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