Erratum on the pay as you wish model by Chen et al. (2017)

In their model of consumer behavior in pay-as-you-wish (PAYW) pricing, Chen et al. (2017) (CKZ hereaf-ter) imply that all less fair-minded consumers with low concerns of advantageous inequity aversion, that is, γ _i ≤ 1, will buy and pay zero, that is, freeload. However, consumers buy only if their utility exceeds zero: A consumer with γ _i ≤ 1 and r _i ≤ c has a positive utility, u _i > 0, only if r _i > γ _i c, and the correct share of freeloaders should be [Formula Presented] whereas the share of less fair-minded consumers who do not freeload should be [Formula Presented] When we postulate γ to be distributed according to some distribution h _[0,1] (γ _i ) in the domain [0, 1] and as-sume a uniform distribution of consumption utilities ϕ(r _i ) = 1, the share of freeloaders can be expressed as [Formula Presented] with ¯γ _[0,1] as the mean of γ in [0, 1] and θ ^CKZ = θ + δ as the share of less fair-minded consumers, and hence the profits under PAYW (equations (4) and (5) in CKZ) were underestimated and should be given by [Formula Presented].