The Effects of Altruism and Social Background in an Online-Based, Pay-What-You-Want Situation

Abstract

Pay-What-You-Want (PWYW) is a participative pricing mechanism that leaves it up to the customer to choose a purchase price. Presently, the factors that influence customers’ willingness to pay are still not completely understood. This study examines the degree to which willingness to pay in an anonymous PWYW purchase situation on the Internet is influenced by the social motif of altruism and communication that as a part of the purchase price, will be donated to a charitable institution identified in advance. We hypothesized that altruism as well as a social background exerted an increasing impact on willingness to pay. A specific purchase situation in which the social background was manipulated was simulated by using online surveys. Altruism was measured using a 7-point Likert-type scale. The sample consisted of 403 participants, predominantly students and young adult employees. We found that communication of a social background led to a highly significant increase in willingness to pay ( p < 0.001). Furthermore, altruism positively impacted the willingness to pay only on the condition that a social background was communicated ( p < 0.001). The insights acquired provide evidence for multiple theoretical assumptions that postulate a relation between willingness to pay and the social background of a purchase situation. The interaction effect of altruism and social background explains why researchers have rarely succeeded in showing a fundamental effect of altruism on the willingness to pay in anonymous PWYW situations: To stimulate this correlation, additional characteristics of the purchase scenario seem to be determinative.