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Selected Works of Jose Fernandez
Article
Pay-what-you-want pricing: Can it be profitable?
Journal of Behavioral and Experimental Economics (2015)
  • Jose M Fernandez
  • Yong Chao, University of Louisville
  • Babu Nahata, University of Louisville
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Abstract
Using a game theoretic framework, we show that not only can pay-what-you-want pricing generate positive profits, but it can also be more profitable than charging a fixed price to all consumers. Further, whenever it is more profitable, it is also Pareto-improving. We derive conditions in terms of two cost parameters, namely the marginal cost parameter for the seller, and the social preference parameter of a consumer to incorporate behavioral considerations for paying too little compared to her reference price.
Disciplines
Publication Date
August, 2015
DOI
10.1016/j.socec.2014.09.004
Citation Information
Jose M Fernandez, Yong Chao and Babu Nahata. "Pay-what-you-want pricing: Can it be profitable?" Journal of Behavioral and Experimental Economics Vol. 57 (2015)
Available at: http://works.bepress.com/jose-fernandez_econ/5/