Pay-what-you-want, identity, and self-signaling in markets
- aRady School of Management, University of California at San Diego, La Jolla, CA 92093;
- bCenter for Research in Experimental Economics and Political Decision Making (CREED), University of Amsterdam, 1018 WB, Amsterdam, The Netherlands;
- cDeutsche Forschungsgemeinschaft Research Training Group, Economics of Innovative Change, Friedrich Schiller University Jena, 07743 Jena, Germany;
- dMax Planck Institute of Economics, 07743 Jena, Germany; and
- eHaas School of Business, University of Cailfornia, Berkeley, CA 94720
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Edited* by George A. Akerlof, University of California, Berkeley, CA, and approved March 19, 2012 (received for review December 20, 2011)

Abstract
We investigate the role of identity and self-image consideration under “pay-what-you-want” pricing. Results from three field experiments show that often, when granted the opportunity to name the price of a product, fewer consumers choose to buy it than when the price is fixed and low. We show that this opt-out behavior is driven largely by individuals’ identity and self-image concerns; individuals feel bad when they pay less than the “appropriate” price, causing them to pass on the opportunity to purchase the product altogether.
Footnotes
- ↵1To whom correspondence should be addressed. E-mail: agneezy{at}ucsd.edu.
Author contributions: A.G., U.G., G.R., and L.D.N. designed research, performed research, analyzed data, and wrote the paper.
The authors declare no conflict of interest.
↵*This Direct Submission article had a prearranged editor.
This article contains supporting information online at www.pnas.org/lookup/suppl/doi:10.1073/pnas.1120893109/-/DCSupplemental.
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