The Effects of Social Interaction and Social Norm Compliance in Pay-What-You-Want Situations

Abstract

Since Pay-What-You-Want is a relatively new field of study, the influence factors during the pricing process are not sufficiently explored. It was hypothesized that in a hypothetical Pay-What-YouWant situation, increased social interaction and social norm compliance would lead to a higher willingness to pay for a travel mug. In a laboratory experiment, 79 German students were randomly assigned to three groups which varied in the degree of social interaction. Social norm compliance was assessed with a questionnaire. A 3 × 3 between-group factorial ANOVA showed a significant main effect for social interaction (p = 0.025, η 2 = 0.08), whilst social norm compliance was slightly not significant (p = 0.067, η 2 = 0.03). Follow-up comparisons were calculated and the results discussed. The findings implicate that especially the degree of social interaction should be regarded, both by researchers and practitioners, as an important situational factor influencing the price in a Pay-What-You-Want situation.

Perceived Price Fairness in Pay-What-You-Want: A Multi-Country Study

“…However, people do pay a price significantly higher than zero [14] [27] added to the list by indicating that social norm compliance influences a customer's willingness to pay, although their results were not statistically significant. Subsequently, Dorn and Suessmair [28] showed the positive effect of personal interaction on a customer's willingness to pay during a payment situation in the PWYW context.…”

The Pay-What-You-Want game: What can be learned from the experimental evidence on Dictator and Trust Games?

“…Particularly, the role of anonymity for payments is emphasized (e.g., Regner and Riener, 2012;Machado and Sinha, 2013) and analyzed (e.g., Jang and Chu, 2012). If social interaction is allowed in a PWYW setting, higher payments are the result (Hilbert and Suessmair, 2015). Overall, the studies either show or emphasize that in PWYW situations other regarding preferences, such as fairness considerations or altruism, and identity play a role.…”

A review of the empirical literature on Pay-What-You-Want price setting

“…The empirical results obtained to date (see Table 1) predominantly indicate that buyer anonymity decreases the average amount paid in PWYW settings (Bondos and Lipowski, 2016;Dorn and Suessmair, 2016;Hilbert and Suessmair, 2015;Kim et al, 2014a (study 1); Lee et al, 2015;Machado and Sinha, 2012;Pöyry and Parvinen, 2014;Riener and Traxler, 2012;Morwitz, 2011, 2013;Veit and Ammermann, 2013). However, the negative effects are primarily reported in studies of hypothetical intentions to pay in student samples whose validity is highly questionable.…”