Bon Jovi’s Priceless Restaurant Could Go Platinum

October 24, 2011, 10:21 AM ET

Jon Bon Jovi’s new pay-what-you-can community restaurant, Soul Kitchen, could also end up taking in more cash than you might expect. In fact, when consumers are allowed to choose their own price, they often end up paying more, experts say.

Pay-what-you-can models work a lot better than classic economic theory suggests they should, says Ayelet Gneezy, an assistant professor of marketing at the UC San Diego Rady School of Management, who has studied the concept. “Almost all pay-what-you-want experiments that I’ve heard of, people pay even when they don’t have to, which is amazing,” Gneezy says. Traditional economic theory holds that people are “selfish, rational agents” who seek to maximize their own best interests — yet people tend not to take advantage of what to calculating eyes would look like an opportunity to get something for nothing. “That suggests people really care about fairness, they want to do the right thing,” she says.

When the money’s going to charity, as it is at the Soul Kitchen, people tend to pay more. Gneezy and colleagues ran an experiment at an amusement park where people could pay anything they wanted for a souvenir photo of themselves riding a roller-coaster. When they were told half of the money was going to charity, fewer people bought the photo, but they paid more than six times as much for it. Basically, when people know the money’s for charity, they don’t want to look like cheapskates, so they either skip it entirely or they give generously, Gneezy says.

Anything that disrupts that feel-good atmosphere, however, reduces the amount people feel like they want to pay. In another experiment, Gneezy found that people paid more at a pay-what-you-want restaurant when they put the money in a donation box than they did when the owner took the money directly. Putting the money in a box anonymously seems to feel more like a gift or a show of appreciation, whereas having someone observe the payment makes it feel more like a business transaction, she says. Suggested prices can also make an exchange feel more businesslike, making people less generous, she says.

Here’s how the Soul Kitchen will work: The restaurant serves three-course meals, made with local, organic ingredients whenever possible. There’s a suggested donation of $10 to cover costs, but there are no prices on the menu — diners are simply asked to pay whatever they can. Those who can’t pay are asked to volunteer behind the scenes, cooking, washing dishes, or waiting tables. The Soul Kitchen is part of the Jon Bon Jovi Soul Foundation’s larger mission to fight poverty and homelessness.

The Jon Bon Jovi Soul Foundation didn’t respond to requests for comment.

Located in Red Bank, N.J., Soul Kitchen has limited hours: It’s open Thursday/Friday/Saturday 5:00 to 7:00, and Sunday 12:00 to 3:00. Reservations are recommended. Click here for more information.

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