You may have heard about Panera Bread’s special non-profit store that it opened last month in St. Louis. Instead of charging for food, the store lets people pay what they wish, similar to the bagel or coffee donation box you might see in an company’s office. It’s too early to know how successful this venture will be, and what kind of information about it Panera will make available, but here’s a prediction: It won’t be all that successful. People will offer to pay a fraction of what the food retails for. Say, less than 50 percent, probably closer one-third the retail price.
Why? These sorts of pay-what-you-wish arrangements work best when the product is specifically not associated with a standard market, and therefore where social norms are likely to apply more strongly. Panera is a for-profit business that operates in a market environment. Opening a single non-profit store won’t change that, and the consumers who visit know it.
Cass Sunstein is currently the Administrator of the White House Office of Information and Regulatory Affairs and has no affiliation with the Nudge blog.
The Nudge blog is edited by John Balz.
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