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Voluntary payments, privacy and social pressure on the internet: A natural field experiment

Tobias Regner and Gerhard Riener

No 82, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

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: 2012
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Citations: View citations in EconPapers (9) Track citations by RSS feed

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Working Paper: Voluntary Payments, Privacy and Social Pressure on the Internet: A Natural Field Experiment (2013) Downloads
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