Feeling ripped off? How dynamic pricing affects perceptions of fairness

Oct 18, 2006

Dynamic pricing, in which sellers make frequent adjustments to their prices, has become more feasible as internet buying increases. In the first study to examine how such pricing strategies affect perceptions of fairness, researchers from the University of South Carolina found that fairness judgments about fluctuating prices depend heavily on time and whether the buyer is involved in setting the price.

"Although fairness is a difficult concept to define, the perception of price fairness is part of a broader judgment of the overall merits of a deal," explain Kelly L. Haws and William O. Bearden.

In a paper appearing in the December issue of the Journal of Consumer Research, the researchers distinguish between "price-posted mechanisms," in which the price is set by the seller, and "price-discovery mechanisms," such as eBay or Priceline, in which prices are negotiated. In a series of three studies, they find that consumers will consider a price unfair if it differs from the price paid by other consumers and if they are not involved in the price-setting process.

"Consumers have higher fairness perceptions and satisfaction regardless of the price level when they play a role in the price setting process rather than when prices are set by the retailer," the researchers explain. Additionally, "consumers view price changes within very short time periods as more unfair than changes over a more extended time period."

The researchers point out that the effects of dynamic pricing explained in their study may be even more pronounced when varying prices are encountered in realistic shopping environments.

Citation: Kelly L. Haws and William O. Bearden, "Dynamic Pricing and Consumer Fairness Perceptions." Journal of Consumer Research: Dec. 2006.

Source: University of Chicago

Explore further: Can science eliminate extreme poverty?

add to favorites email to friend print save as pdf

Related Stories

Bitcoin gets easier for consumers to buy, spend

Apr 11, 2014

It's getting easier for consumers to buy and spend bitcoin, the cybercurrency that has captured much of the tech world. With each passing month, entrepreneurs are rolling out new technology for consumers to buy and store ...

Fair bosses pay a price

Mar 24, 2014

Bosses who are fair make their workers happier and their companies more productive, but in the end may be burning themselves out.

Q&A: Amazon executive sees Fire TV as high-value

Apr 09, 2014

Amazon.com Inc.'s new Fire TV streaming-media device is the third hardware category for the online-retail giant, following its Kindle electronic readers and Kindle Fire tablets.

Comcast, lawmakers debate mega-merger benefits

Apr 09, 2014

Comcast and skeptical lawmakers sparred Wednesday over the merits of a proposed mega-merger with Time Warner Cable which would boost the position of the largest US cable and broadband provider.

Recommended for you

Study finds law dramatically curbing need for speed

17 hours ago

Almost seven years have passed since Ontario's street-racing legislation hit the books and, according to one Western researcher, it has succeeded in putting the brakes on the number of convictions and, more importantly, injuries ...

Newlyweds, be careful what you wish for

Apr 17, 2014

A statistical analysis of the gift "fulfillments" at several hundred online wedding gift registries suggests that wedding guests are caught between a rock and a hard place when it comes to buying an appropriate gift for the ...

User comments : 0

More news stories

Study finds law dramatically curbing need for speed

Almost seven years have passed since Ontario's street-racing legislation hit the books and, according to one Western researcher, it has succeeded in putting the brakes on the number of convictions and, more importantly, injuries ...

Impact glass stores biodata for millions of years

(Phys.org) —Bits of plant life encapsulated in molten glass by asteroid and comet impacts millions of years ago give geologists information about climate and life forms on the ancient Earth. Scientists ...