Anchors, norms and dual processes: Exploring decision making in Pay-What-You-Want pricing contexts

Abstract

The dissertation explores factors influencing consumers' payments in anonymous Pay-What-You-Want (PWYW) pricing contexts. Consumers often pay more than zero when given the opportunity to self-determine payments. However, most PWYW research has focused on contexts where the possibility of social influence from a salesperson or clerk is present. I suggest that in anonymous exchange contexts where social pressure does not exist, consumers will nevertheless make voluntary payments greater than zero. \n \nThe present research explores PWYW in anonymous purchase contexts. Results from eight studies indicate that PWYW payment amounts are affected by heuristics and biases. In Essay 1, the influence of reference price on PWYW payments is explored. Firm-provided external reference prices (ERPs) framed as injunctive norms (e.g., suggested price) and descriptive norms (e.g., average payment) caused anchoring effects on voluntary payments such that those with higher ERPs reported higher payments. Further, ERPs framed as descriptive (vs. injunctive) norms were more predictive of payment amounts, but only when the ERP is high. \n \nRecalling internal reference price information is more effortful than simply reacting to a firm-provided price. The possibility that decreased cognitive processing results in higher payments, violating the concept of self-interest primacy, is explored in Essay 2. Four studies manipulate processing styles and demonstrate that when consumers use more effortful cognitive processing, they tend to make lower PWYW payments. These results suggest that consumers are likely to rely on a normal price heuristic when using more superficial processing. \n \nThe dissertation demonstrates the importance of reference price information and cognitive processing styles when voluntary anonymous payments are made anonymously. PWYW decisions are influenced by the exchange context and how the information is cognitively processed. At a theoretical level, the findings demonstrate that consumers make voluntary payments in the absence of social pressure and that those payments can be predictably influenced by features in the exchange setting. Finally, the research suggests that consumers who exert less cognitive effort in PWYW situations make higher payments. It therefore appears that the first instinct is not to act self-interestedly by making little or no payments, but rather payments seem to be guided by heuristic-based decision making.

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