Abstract:
Participative pricing demonstrates the basic idea of allowing customer participation in price-setting process. Nottingham Playhouse, IBIS Singapore, Metropolitan Museum of Art, Wiener Deewan, Girl Talk, 8k, Zest consulting, Radiohead band and many more have successfully implemented pay-what-you-want (PWYW), the most innovative form of participative pricing. Based on the degree of participation, PWYW is the highest form that allows buyers to select any price they want to pay for a product/service, including zero. The present study examines how customers lower their motivation to pay more for products offered under PWYW by morally disengaging themselves from reciprocity concerns. It focuses on one mechanism of moral disengagement—displacement of responsibility and tests the proposed hypotheses in PWYW context. 284 responses were gathered using structured questionnaires at a reputed public university. Data were analysed using partial least-squares structural equation modelling. Findings indicate that customers’ moral disengagement via displacement of responsibility towards reciprocity concerns is negatively associated with willingness-to-pay more (WTPM). Results corroborate the attenuating role of perceived control on the negative association between displacement of responsibility towards reciprocity concerns and WTPM. However, relaxation from monetary commitments does not have a significant moderating effect on the negative relationship between moral disengagement and WTPM. This study is possibly the first to empirically investigate the interplay among individuals’ cognitive mechanisms, moral disengagement from reciprocity concerns and socio-demographic variables under participative pricing. Findings empirically substantiate the theory of moral disengagement, moral self-regulation and social cognitive theory. Practitioners should actively engage customers’ moral self-regulation process and provide more sense of perceived control while designing participative pricing offerings.