The effects of individual internal versus external reference prices on consumer decisions for pay-what-you-want payments

Anna Kukla-Gryz and Katarzyna Zagórska ()

Central European Economic Journal, 2017, vol. 4, issue 51, 1-17

Abstract: We empirically investigate the interaction between internal and external reference prices on stated payments in a Pay-What-You-Want (PWYW) scheme. Using results of a vignette experiment with e-books, we show that when an external reference price provided is lower than respondents’ internal reference prices, the average of PWYW payments significantly decreases compared with a situation in which the external reference price is not provided. The relationship is the opposite when the external reference price provided to respondents is higher than their internal reference prices. In such a case, upward pressure is created, thus the average of PWYW payments increases. These results remain true when we control for expected quality of e-books. Additionally, we find that when the external reference price is not provided, the size of PWYW payments depends positively on individual factors such as risk-taking propensity and perceived costs of e-book production.

Keywords: Pay-what-you-want; cultural goods; quality uncertainty; reference price; experience goods (search for similar items in EconPapers)
JEL-codes: D12 M31 Z19 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ceuecj:v:4:y:2017:i:51:p:1-17:n:1

DOI: 10.1515/ceej-2018-0001

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