Pay What You Want – But Pay Enough! Information Asymmetries and PWYW Pricing

Greiff, Matthias and Egbert, Henrik and Xhangolli, Kreshnik (2013): Pay What You Want – But Pay Enough! Information Asymmetries and PWYW Pricing.

Abstract

Pay What You Want (PWYW) pricing has received considerable attention recently. Empirical studies show that when PWYW pricing is implemented buyers do not behave selfishly in a number of cases and that some sellers are able to use PWYW to increase turnover as well as profits. In this paper we present a theoretical model of buyer behavior under asymmetric information about production costs. Our model shows that information asymmetries provide an explanation for the results found in empirical studies.

• Item Type: MPRA Paper
• Language: English
• Keywords: PWYW pricing, information asymmetry, fairness, buyer behavior
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M3 - Marketing and Advertising

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