Consumer Perceptions of Price (Un)Fairness

Abstract

A series of studies demonstrates that consumers are inclined to beiieve that the selling price of a good or service is substantiaily higher than its fair price. Consumers appear sensitive to several reference points-including past prices, competitor prices, and cost of goods soid-but underestimate the effects of infiation, overattribute price differences to profit, and faii to take into account the full range of vendor costs. Potential corrective interventions-such as providing historical price information, expiaining price differences, and cueing costs-were oniy modestiy effective. These results are considered in the context of a four-dimensional transaction space that iilustrates sources of perceived unfairness for both individual and multiple transactions.