| Summary: | Pay-what-you-want (PWYW) is a unique participative pricing mechanism in which the buyers
can pay nothing or pay any price they want and the seller has to accept it without being able to
withdraw the offer (Kim et al., 2009, 2014). Prior research on PWYW pricing, focuses on the
direct and interactive effects of several individual and situational variables, such as altruism,
price consciousness and fairness perceptions (Kim et al., 2009), involvement level (Roy 2015),
internal reference prices (Roy et al. 2016a), external reference prices, social visibility and
purchase motivation (Roy et al. 2016b). However, most of these studies were conducted in
popular service contexts such as restaurant, cinema and delicatessen (Kim et al., 2009, 2014;
Roy et al. 2016a,b). Hence, it is not clear if and to what extent the mechanism by which
consumers decide how much to pay in a PWYW setting, is similar or different between the
products and services contexts. Similarly, recent studies examine the role of product involvement
and social visibility in PWYW decision-making process but ignore other variables such as
consumer knowledge and product/service characteristics. We address both these gaps with a new
conceptual model that incorporates direct and interactive effects of consumer knowledge, social
visibility and tangibility as the independent variables and the allocation of internal reference
prices into the prices that the consumers are willing to pay as the dependent variable, while
controlling for involvement level. We use a lab experiment with undergraduate students to test
our hypotheses and report our findings in this paper.
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