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Is a good deal always fair? Examining the concepts of transaction value and price fairness

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  • Xia, Lan
  • Monroe, Kent B.
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    Abstract

    Previous research has shown that if consumers are aware that they are paying more than another customer for a similar transaction, then they may perceive the price to be unfair. A concept closely related to fairness is transaction value, defined as consumers' perceptions of the psychological satisfaction or pleasure from taking advantage of a price deal. In this research, we conceptualize that although consumers' perceptions of price fairness and transaction value share many similarities, nevertheless there are also important differences. Using three studies, we empirically examine these differences. We show that although a "bad deal" is typically perceived to be an unfair price, a "good deal" is not necessarily perceived to be the fairest price.

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    File URL: http://www.sciencedirect.com/science/article/B6V8H-50J4M7B-1/2/74806181349faf50116382409a26a918
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Psychology.

    Volume (Year): 31 (2010)
    Issue (Month): 6 (December)
    Pages: 884-894

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    Handle: RePEc:eee:joepsy:v:31:y:2010:i:6:p:884-894

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    Web page: http://www.elsevier.com/locate/joep

    Related research

    Keywords: Price fairness Transaction value Comparative reference Social comparison;

    References

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    1. Kelly L. Haws & William O. Bearden, 2006. "Dynamic Pricing and Consumer Fairness Perceptions," Journal of Consumer Research, University of Chicago Press, vol. 33(3), pages 304-311, October.
    2. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
    3. Richard Thaler, 1985. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 4(3), pages 199-214.
    4. Bolton, Lisa E & Warlop, Luk & Alba, Joseph W, 2003. " Consumer Perceptions of Price (Un)Fairness," Journal of Consumer Research, University of Chicago Press, vol. 29(4), pages 474-91, March.
    5. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
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    Cited by:
    1. Azar, Ofer H., 2013. "Competitive strategy when consumers are affected by reference prices," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 327-340.

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