Exploring the role of spotlight effect in pay‐what‐you‐want (PWYW) pricing—An anchoring and adjustment perspective

This paper investigates social influences on Pay-What-You-Want (PWYW) pricing decisions by combining a socio-psychological phenomenon, called “spotlight effect” (defined as an egocentric bias while estimating the salience of one's own behavior and external appearance), with well-established “anchoring adjustment” perspective. We test our hypotheses one field study two lab experiments. Findings show that when making payment in PWYW setting, customers perceive greater attention self (vs. others) presence distant close) others, which makes them initially anchor price they are willing to pay their internal reference price. However, this anchoring effect is adjusted downwards (i.e., reduced) prices. Our findings would help managers understand factors influencing customers' decisions, based Managers can further use knowledge develop more effective strategies drive higher