Pricing & Auctions

The increasing digitalisation of business processes enables the increased use of dynamic or interactive pricing mechanisms on electronic trading platforms and thus the increasing personalisation of prices. Customer-driven pricing mechanisms, for example, allow buyers to influence their purchase price. Two prominent examples are Pay What You Want (PWYW) and Name Your Own Price (NYOP). Companies that use PWYW leave it entirely up to their customers to decide how much they want to pay for a product or service - in extreme cases, the customer pays nothing. With NYOP, customers make a price offer of their choice, but it is only accepted by the seller if it is above the seller's secret minimum price. Since customers in PWYW and NYOP are involved in the pricing process and (partly) determine the final price of a transaction, these pricing formats are also called participatory pricing mechanisms.

The aim of our research is to better understand the motives for sellers to use such a mechanism and the behaviour of consumers in these pricing mechanisms. Behaviour-influencing questions arise about willingness to pay, search costs and the payment or bidding behaviour of consumers. In addition, the optimal design of these mechanisms is an important and practically relevant question. On the one hand, this understanding is important to derive implications for the optimal application of PWYW and NYOP; on the other hand, consumers can be supported in making better decisions in such pricing formats. Finally, regulators can be informed about the efficiency and competitive impact of these mechanisms.
In addition to customer-driven pricing mechanisms, we deal with behavioural or experimental approaches to measuring willingness to pay as well as related sales or pricing strategies, such as dynamic pricing, new product pricing and opaque selling.