Social Preferences and Charitable Giving: How Pay-What-You-Want Pricing Can Optimize Social Welfare

Ayelet Gneezy, University of California at San Diego, USA
Uri Gneezy, University of California at San Diego, USA
Leif D. Nelson, University of California, Berkeley, USA
Recently a small number of companies have adopted pay-what-you-want pricing, in which customers receive a good or service for whatever price they choose to pay (including $0). Two sets of field data (n > 700,000) and two large field experiments (n > 130,000) showed that this mechanism is not only profitable, but when bundled with charitable giving, it can also generate a substantial prosocial surplus.
[ to cite ]:
Ayelet Gneezy, Uri Gneezy, and Leif D. Nelson (2011) ,"Social Preferences and Charitable Giving: How Pay-What-You-Want Pricing Can Optimize Social Welfare", in NA - Advances in Consumer Research Volume 38, eds. Darren W. Dahl, Gita V. Johar, and Stijn M.J. van Osselaer, Duluth, MN : Association for Consumer Research.