Pay-what-you-want in groups – evidence from a field experiment

ABSTRACT

Pay-what-you-want (PWYW) mechanisms are a specific form of voluntary market payment. While a large number of recent studies have considered their design options, the aspect of group behaviour in PWYW situations has not been investigated, although a substantial part of payment decisions occur in group constellations. We provide initial evidence by running a field experiment implementing a PWYW mechanism in a cinema characterized by group attendance, finding that groups chose to pay similar amounts as individuals. Group payments can be increased by a prosocial framing of the decision, while an increase in group size and repeated participation reduce voluntary payments. We thus show that group payment decisions in PWYW situations are characterized by altruism concerns rather than in-group egoism.

KEYWORDS:

• Field experiment
• framing
• group decision-making
• pay-what-you-want
• prosocial behaviour

JEL CLASSIFICATION:

• C91
• D10
• D83

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Participants were on average 24.6 years old, 62.4% were female.

² A translation of the announcements prior and after the screening are documented in Appendix A.

³ Both questionnaires are provided in Appendix B.

⁴ The average payment of 2€ corresponds to the price of a ticket in the previous semester. Thus, 2€ probably served as a good reference point for viewers who had attended the cinema in the previous semester, assuming that they remembered this particular price. Thus, 2€ is not entirely a natural focal point for pricing, but is likely to have been influenced by previous prices for a considerable share of the viewers.

⁵ The five experimental sessions were conducted consecutively in the first 5 weeks on the semester. The second session is an outlier in terms of the average payment. This result has the simple explanation that the airing (the comedy ‘Papadopoulos & Sons’) attracted a large group of Greek exchange students, whereby a correspondingly high number of viewer chose to pay only minimal amounts. While – due to the anonymity of payments – we cannot be sure, it is very likely that this particular group caused the lower average payment. Consequently, we would not interpret this result as a consequence of a self-selection of viewers after the initial PWYW-based airing. The fact that average payments return to about 2€ in the ensuing week lends support to this interpretation.