Pay-What-You-Want pricing schemes: A self-image perspective

Goytom Kahsay and Margaret Samahita

Journal of Behavioral and Experimental Finance, 2015, vol. 7, issue C, 17-28

Abstract: Pay-What-You-Want (PWYW) pricing schemes are becoming increasingly popular. We develop a model incorporating self-image into the buyer’s utility function and introduce heterogeneity in consumption utility and image-sensitivity, generating different purchase decisions and optimal prices across individuals. When a good’s fixed price is lower than a threshold fair value, PWYW can lead to a lower utility. This may result in a lower purchase rate and higher average price, accounting for previously unexplained field experimental evidence. An increase in the threshold value decreases the buyer’s utility and may further lower the purchase rate, resulting in a further increase in purchase price.

Keywords: Pay-What-You-Want; Self-image; Fairness; Voluntary contribution (search for similar items in EconPapers)
JEL-codes: D03 D11 D49 D64 G02 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (12)

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http://www.sciencedirect.com/science/article/pii/S221463501500026X

Related works:
Working Paper: Pay-What-You-Want Pricing Schemes: A Self-Image Perspective (2014)
Working Paper: Pay-What-You-Want Pricing Schemes: A Self-Image Perspective (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:7:y:2015:i:c:p:17-28

DOI: 10.1016/j.jbef.2015.05.001

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