The role of external reference price in pay-what-you-want pricing: An empirical investigation across product types

Exploring the role of spotlight effect in pay‐what‐you‐want (PWYW) pricing—An anchoring and adjustment perspective

“…Finally, we also clarify the role of external anchors in PWYW pricing in this paper. The moderating role of external reference price in the PWYW context currently shows mixed findings with some work showing a negative impact (Roy et al, 2016; Schmidt et al, 2014; Weisstein et al, 2019) while others arguing a positive or negative impact, albeit based on the external reference price type (Johnson & Cui, 2013). The current work helps to understand the moderating role of external reference price further.…”

“…Similarly, Roy et al (2016) argue that external reference price negatively moderates the influence of social forces increasing PWYW payments. Similarly, Weisstein et al (2019) demonstrate that presence (vs. absence) of external reference price reduces (increases) PWYW payment for hedonic (utilitarian) products. Further, the absence of external reference price combined with the social nature (e.g., image concerns) of PWYW payments can make it uncertain as customers struggle to decide their own prices (Sharma et al, 2020), which in the absence of external reference price can help raise PWYW payments as customers tend to rely on their IRP (Roy et al, 2016).…”

“…Finally, research on the impact of external anchors (e.g., external reference price) on the prices paid in the PWYW context also offers mixed findings (Johnson & Cui, 2013). For example, some show that external anchors have a positive effect on PWYW prices (Kim et al, 2014) while others report a negative (Roy et al, 2016; Schmidt et al, 2014; Weisstein et al, 2019) or nonsignificant effect (Machado & Sinha, 2012). A recent study in the online PWYW context also shows that customers may pay less for unfamiliar brands in the presence of an external anchor, but it would have no impact on their pricing decisions for familiar brands (Weisstein et al, 2016).…”

How Price Dispersion Influences Intention to Join Online Group Buying: The Role of Perceived Price Fairness

“…A reference price can be defined as any price in relation to which other prices are seen (Biswas and Blair,1991;Lowe and Alpert, 2010;Sinha and Adhikari, 2017).Reference price contains the external reference price and the internal reference price (Monroe, 1990). External reference prices can be provided to the consumer through channels such as advertising, catalog listings, and consumer price guides (Weisstein et al, 2019). Internal reference prices are those stored in the consumer's memory (Kumar et al1998).Adaptation level theory (Helson, 1964) and assimilation-contrast theory (Sherif and Hovland, 1961) are always adopted to explain reference price effect.…”

Towards a new price discrimination strategy

“…PWYW pricing is an innovative participative pricing which provides complete price-setting power to buyers without any restriction of payment amount (i.e. buyers can pay any price they want, even zero and PWYW sellers are obliged to complete the transaction without withdrawing the offer) (Kim et al, 2009;Gneezy et al, 2010Gneezy et al, , 2012Gerpott, 2017;Weisstein et al, 2019;Viglia et al, 2019).…”