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

Matthias Greiff and Henrik Egbert ()

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Pay-What-You-Want; PWYW Game; participative pricing; experiments; reciprocity (search for similar items in EconPapers)
JEL-codes: C90 D11 M21 M31 (search for similar items in EconPapers)
Date: 2016-11-22
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth, nep-mkt and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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