Expectations, Satisfaction, and Utility from Experience Goods: A Field Experiment in Theaters

• Authors: Joan Llull.
• BSE Working Paper: 110418 | December 16
• Keywords: experience goods , pay-what-you-want , expectations
• JEL codes: C72, C91, D81
• experience goods
• pay-what-you-want
• expectations

Understanding what affects satisfaction from consumption is fundamental to studying economic behavior. However, measuring subjective hedonic experiences is not trivial, in particular when studying experience goods in which quality is difficult to observe prior to consumption. We report the results of a field experiment with a theater show in which the audience pays at the end of the show under pay-what-you-want pricing. Using questionnaires, we measure expected enjoyment before the show, as well as the realized enjoyment after. Correlating the amounts paid with the expected and realized enjoyment, we find that individuals with a larger gap between reported expectations and enjoyment pay significantly more. Once we account for the satisfaction gap, the level of expected enjoyment or realized enjoyment has no significant effect in predicting payments.