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

Kahsay, Goytom Abraha and Samahita, Margaret LU (2015) In Journal of Behavioral and Experimental Finance 7. p.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.
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Pay-What-You-Want, Self-image, Fairness, Voluntary contribution
in
Journal of Behavioral and Experimental Finance
volume
7
pages
17 - 28
publisher
Elsevier
external identifiers
  • scopus:84934875201
ISSN
2214-6350
DOI
10.1016/j.jbef.2015.05.001
language
English
LU publication?
yes
id
9e71449f-53ef-4400-8cc0-21676b9fd0c8 (old id 7861186)
date added to LUP
2015-09-08 10:44:40
date last changed
2017-06-11 04:19:29
@article{9e71449f-53ef-4400-8cc0-21676b9fd0c8,
  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.},
  author       = {Kahsay, Goytom Abraha and Samahita, Margaret},
  issn         = {2214-6350},
  keyword      = {Pay-What-You-Want,Self-image,Fairness,Voluntary contribution},
  language     = {eng},
  pages        = {17--28},
  publisher    = {Elsevier},
  series       = {Journal of Behavioral and Experimental Finance},
  title        = {Pay-What-You-Want pricing schemes: A self-image perspective},
  url          = {http://dx.doi.org/10.1016/j.jbef.2015.05.001},
  volume       = {7},
  year         = {2015},
}