IDEAS home Printed from https://ideas.repec.org/p/war/wpaper/2017-14.html
   My bibliography  Save this paper

The strength of the anchoring effect on Pay What You Want payments: Evidence from a vignette experiment

Author

Listed:
  • Anna Kukla-Gryz

    (Faculty of Economic Sciences, University of Warsaw)

  • Katarzyna Zagórska

    (Faculty of Economic Sciences, University of Warsaw)

Abstract

The goal of this paper is to empirically investigate, on the example of eBooks, the effects of the expected quality, external and internal reference prices, risk-taking propensity and perceived costs of production on the size of the voluntary payments in pay-what-you-want (PWYW) scheme. Using the results of a vignette experiment, we show that independently from the expected quality of the eBook, when individual internal reference price is higher than external reference price, voluntary payments are significantly higher if external reference price is not provided. When the external reference price is not provided then PWYW payments depend positively on consumers’ individual internal reference price, and the perceived percentage of the price believed to cover the author’s compensation and the publication costs. The originality of the research comes from separating the anchoring effect of external reference prices from the quality signal effect.

Suggested Citation

  • Anna Kukla-Gryz & Katarzyna Zagórska, 2017. "The strength of the anchoring effect on Pay What You Want payments: Evidence from a vignette experiment," Working Papers 2017-14, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2017-14
    as

    Download full text from publisher

    File URL: https://www.wne.uw.edu.pl/index.php/download_file/3618/
    File Function: First version, 2017
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Regner, Tobias & Riener, Gerhard, 2012. "Voluntary payments, privacy and social pressure on the internet: A natural field experiment," DICE Discussion Papers 82, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    3. 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.
    4. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    5. Ju-Young Kim & Katharina Kaufmann & Manuel Stegemann, 2014. "The impact of buyer–seller relationships and reference prices on the effectiveness of the pay what you want pricing mechanism," Marketing Letters, Springer, vol. 25(4), pages 409-423, December.
    6. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    7. Egbert, Henrik & Greiff, Matthias & Xhangolli, Kreshnik, 2014. "PWYW Pricing ex post Consumption: A Sales Strategy for Experience Goods," MPRA Paper 53376, University Library of Munich, Germany.
    8. Chandrashekaran, Rajesh & Grewal, Dhruv, 2006. "Anchoring effects of advertised reference price and sale price: The moderating role of saving presentation format," Journal of Business Research, Elsevier, vol. 59(10-11), pages 1063-1071, October.
    9. Johnson, Jennifer Wiggins & Cui, Annie Peng, 2013. "To influence or not to influence: External reference price strategies in pay-what-you-want pricing," Journal of Business Research, Elsevier, vol. 66(2), pages 275-281.
    10. Lynn, Michael & Flynn, Sean Masaki & Helion, Chelsea, 2013. "Do consumers prefer round prices? Evidence from pay-what-you-want decisions and self-pumped gasoline purchases," Journal of Economic Psychology, Elsevier, vol. 36(C), pages 96-102.
    11. Pieter A. Gautier & Bas van der Klaauw, 2012. "Selection in a field experiment with voluntary participation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(1), pages 63-84, January.
    12. Natter, Martin & Kaufmann, Katharina, 2015. "Voluntary market payments: Underlying motives, success drivers and success potentials," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 149-157.
    13. Kunter, Marcus, 2015. "Exploring the Pay-What-You-Want payment motivation," Journal of Business Research, Elsevier, vol. 68(11), pages 2347-2357.
    14. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kukla-Gryz Anna & Zagórska Katarzyna, 2017. "The effects of individual internal versus external reference prices on consumer decisions for pay-what-you-want payments," Central European Economic Journal, Sciendo, vol. 4(51), pages 1-17, December.
    2. Greiff, Matthias & Egbert, Henrik, 2016. "A Survey of the Empirical Evidence on PWYW Pricing," MPRA Paper 68693, University Library of Munich, Germany.
    3. Gerpott Torsten J., 2016. "A review of the empirical literature on Pay-What-You-Want price setting," Management & Marketing, Sciendo, vol. 11(4), pages 566-596, December.
    4. Samahita Margaret, 2020. "Pay-What-You-Want in Competition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(1), pages 1-16, January.
    5. 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.
    6. Klaus M. Schmidt & Martin Spann & Robert Zeithammer, 2015. "Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets," Management Science, INFORMS, vol. 61(6), pages 1217-1236, June.
    7. Rabbanee, Fazlul K. & Roy, Rajat & Sharma, Piyush, 2022. "Contextual differences in the moderating effects of price consciousness and social desirability in pay-what-you-want (PWYW) pricing," Journal of Business Research, Elsevier, vol. 141(C), pages 13-25.
    8. Krämer, Florentin & Schmidt, Klaus M. & Spann, Martin & Stich, Lucas, 2017. "Delegating pricing power to customers: Pay What You Want or Name Your Own Price?," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 125-140.
    9. Greiff, Matthias & Egbert, Henrik, 2016. "The Pay-What-You-Want Game and Laboratory Experiments," MPRA Paper 75222, University Library of Munich, Germany.
    10. Ma, Xuejing & Wang, Zetao & Liu, Hongju, 2022. "Do long-life customers pay more in pay-what-you-want pricing? Evidence from live streaming," Journal of Business Research, Elsevier, vol. 142(C), pages 998-1009.
    11. Hofmann, Elisa & Fiagbenu, Michael E. & Özgümüs, Asri & Tahamtan, Amir M. & Regner, Tobias, 2021. "Who is watching me? Disentangling audience and interpersonal closeness effects in a Pay-What-You-Want context," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 90(C).
    12. Regner, Tobias, 2015. "Why consumers pay voluntarily: Evidence from online music," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 205-214.
    13. Ranjit M. Christopher & Fernando S. Machado, 2019. "Consumer response to design variations in pay-what-you-want pricing," Journal of the Academy of Marketing Science, Springer, vol. 47(5), pages 879-898, September.
    14. Greiff Matthias & Egbert Henrik, 2017. "The Pay-What-You-Want game: What can be learned from the experimental evidence on Dictator and Trust Games?," Management & Marketing, Sciendo, vol. 12(1), pages 124-139, March.
    15. Byung Cho Kim & So Eun Park & Detmar W. Straub, 2022. "Pay-What-You-Want Pricing in the Digital Product Marketplace: A Feasible Alternative to Piracy Prevention?," Information Systems Research, INFORMS, vol. 33(3), pages 784-793, September.
    16. Emili Vizuete-Luciano & Oktay Güzel & José M. Merigó, 2023. "Bibliometric research of the Pay-What-You-Want Topic," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(5), pages 413-426, October.
    17. Christoph Feldhaus & Tassilo Sobotta & Peter Werner, 2019. "Norm Uncertainty and Voluntary Payments in the Field," Management Science, INFORMS, vol. 65(4), pages 1855-1866, April.
    18. Weisstein, Fei L. & Kukar-Kinney, Monika & Monroe, Kent B., 2016. "Determinants of consumers' response to pay-what-you-want pricing strategy on the Internet," Journal of Business Research, Elsevier, vol. 69(10), pages 4313-4320.
    19. Kerschbamer, Rudolf & Müller, Daniel, 2020. "Social preferences and political attitudes: An online experiment on a large heterogeneous sample," Journal of Public Economics, Elsevier, vol. 182(C).
    20. Balafoutas, Loukas & Kerschbamer, Rudolf & Sutter, Matthias, 2012. "Distributional preferences and competitive behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 83(1), pages 125-135.

    More about this item

    Keywords

    Laffer curve; tax evasion; labor market duality;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Z19 - Other Special Topics - - Cultural Economics - - - Other
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:war:wpaper:2017-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marcin Bąba (email available below). General contact details of provider: https://edirc.repec.org/data/fesuwpl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.