Paying For a Chance to Save Money: Participation Fees in Name-Your-Own-Price Selling

Robert Zeithammer, University of California Los Angeles, USA
Martin Spann, University of Munich, Germany
Gerald Haubl, University of Alberta, Canada
Lucas Stich, University of Munich, Germany
We report results of an incentive-compatible experiment that tests the economic-theoretical prediction that name-your-own-price retailers, such as Priceline, should benefit from charging upfront participation fees. As predicted, such fees are profitable. We propose and estimate behaviorally enriched models (involving risk-aversion and myopia) of the observed consumer entry and bidding behavior.
[ to cite ]:
Robert Zeithammer, Martin Spann, Gerald Haubl, and Lucas Stich (2015) ,"Paying For a Chance to Save Money: Participation Fees in Name-Your-Own-Price Selling", in NA - Advances in Consumer Research Volume 43, eds. Kristin Diehl and Carolyn Yoon, Duluth, MN : Association for Consumer Research, Pages: 750-750.