Voluntary Payments, Privacy and Social Pressure on the Internet: A Natural Field Experiment

Tobias Regner and Gerhard Riener

No 2013-032, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: The emergence of Pay-What-You-Want (PWYW) business models as a successful alternative to conventional uniform pricing brings up new questions related to the task of pricing. We investigate the effect of a reduction of privacy on consumers' purchase decisions (whether to buy, and if so how much to pay) in a natural experiment at an online music store with PWYW-like pricing. Our study extends the empirical evidence of the reduced anonymity effect, previously established for donation or public goods contexts, to a consumption environment. We find that revealing the name of the customer led to slightly higher payments, while it drastically reduced the number of customers purchasing. Overall, the regime led to a revenue loss of 15%. The experiment suggests that even low levels of social pressure without face to face interaction on customers leads to a reduction of welfare.

Keywords: Digital content; Voluntary Payments; PWYW; Public goods; Voluntary contributions; Social pressure; Internet; Privacy; Natural experiment (search for similar items in EconPapers)
JEL-codes: D03 D49 H41 L82 L86 P14 (search for similar items in EconPapers)
Date: 2013-09-09
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-ict, nep-mkt and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Voluntary payments, privacy and social pressure on the internet: A natural field experiment (2012)
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