PAY LESS OR PAY WHAT IS FAIR? ANALYZING PRICING STRATEGIES

Abstract

Companies are looking for alternatives that allow them to stand out from their competition. One of the alternatives to achieve this is the participatory pricing strategies in which consumers have control over the prices. However, under these types of strategies, suppliers are at risk because consumers might engage themselves in opportunistic behaviors and decide to pay nothing. The aim of this paper was to analyze the effects of social approval (a person’s desire to have others’ positive appraisal) on the individuals’ willingness to pay and the relationship between participatory pricing strategies and the perception of justice. To achieve this, a 49-participant field experiment (mean difference) was conducted. The results did not provide evidence to support the idea that social approval increases the willingness to pay. Instead, it provides evidence of the impact of this strategy on the perception of justice.