Name your prize! Leif Nelson suggests businesses should explore this pricing strategy as a way to contribute to their community, increase revenue, and better their corporate image. Nelson draws conclusions from a series of field experiments he conducted at major theme parks manipulating various aspects of the purchasing experience for souvenir action photos.

Leif Nelson and his co-authors, Ayelet Gneezy and Uri Gneezy, published “Shared Social Responsibility: A Field Experiment in Pay-What-You-Want Pricing and Charitable Giving” in Science magazine. They found that while fewer people purchase pay-what-you-want items linked to charitable donations, the price per item rose more than enough to compensate for the slight loss in volume. Total corporate revenue was greater when charitable donations were involved. Purchasers consistently reported feeling more positive about a company that offered pay-what-you-want pricing linked to charitable donations.

The increased revenue for corporations is supported by social norms that encourage generosity towards charities. Nelson explored the possibility that corporations might re-purpose their current charitable contributions to be linked to pay-what-you-want purchases. He was talking at Small Steps Big Leap: The Science of Getting People to Do the Right Thing, a conference convened by the Center for Social Innovation at the Stanford Graduate School of Business.