Erratum on the pay as you wish model by Chen et al. (2017)
- Author(s)
- Karl Akbari, Udo Wagner
- Abstract
In their model of consumer behavior in pay-as-you-wish (PAYW) pricing, Chen et al. (2017) (CKZ hereaf-ter) imply that all less fair-minded consumers with low concerns of advantageous inequity aversion, that is, γ i ≤ 1, will buy and pay zero, that is, freeload. However, consumers buy only if their utility exceeds zero: A consumer with γ i ≤ 1 and r i ≤ c has a positive utility, u i > 0, only if r i > γ i c, and the correct share of freeloaders should be [Formula Presented] whereas the share of less fair-minded consumers who do not freeload should be [Formula Presented] When we postulate γ to be distributed according to some distribution h [0,1] (γ i ) in the domain [0, 1] and as-sume a uniform distribution of consumption utilities ϕ(r i ) = 1, the share of freeloaders can be expressed as [Formula Presented] with ¯γ [0,1] as the mean of γ in [0, 1] and θ CKZ = θ + δ as the share of less fair-minded consumers, and hence the profits under PAYW (equations (4) and (5) in CKZ) were underestimated and should be given by [Formula Presented].
- Organisation(s)
- Department of Marketing and International Business
- External organisation(s)
- MODUL University Vienna, National Taiwan University of Science and Technology
- Journal
- Marketing Science: the marketing journal of INFORMS
- Volume
- 41
- Pages
- 657
- No. of pages
- 1
- ISSN
- 0732-2399
- DOI
- https://doi.org/10.1287/mksc.2021.1319
- Publication date
- 2020
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502020 Market research
- Keywords
- ASJC Scopus subject areas
- Marketing, Business and International Management
- Portal url
- https://ucrisportal.univie.ac.at/en/publications/cfb44cf6-2a9c-4b2d-b235-eefc2ee7f00c