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A special price just for you: effects of personalized dynamic pricing on consumer fairness perceptions

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Listed:
  • Anna Priester

    (TU Kaiserslautern)

  • Thomas Robbert

    (TU Kaiserslautern)

  • Stefan Roth

    (TU Kaiserslautern)

Abstract

Personalized dynamic pricing (PDP) involves dynamically setting individual-consumer prices for the same product or service according to consumer-identifying information. Despite its profitability, this pricing provokes strong negative fairness perceptions, explaining why managers are reluctant to implement it. This research provides important insights into the effect of two PDP dimensions (price individualization level and segmentation base) on fairness perceptions and the moderating role of privacy concerns. The results of two experimental studies indicate that consumers perceive individual prices as less fair than segment prices. They also evaluate location-based pricing as less fair than purchase history-based pricing. Consumer privacy concerns moderate these effects.

Suggested Citation

  • Anna Priester & Thomas Robbert & Stefan Roth, 2020. "A special price just for you: effects of personalized dynamic pricing on consumer fairness perceptions," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(2), pages 99-112, April.
    • Handle: RePEc:pal:jorapm:v:19:y:2020:i:2:d:10.1057_s41272-019-00224-3
    DOI: 10.1057/s41272-019-00224-3
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    4. Hufnagel, Gerrit & Schwaiger, Manfred & Weritz, Louisa, 2022. "Seeking the perfect price: Consumer responses to personalized price discrimination in e-commerce," Journal of Business Research, Elsevier, vol. 143(C), pages 346-365.
    5. Martin Spann & Bernd Skiera, 2020. "Dynamische Preisgestaltung in der digitalisierten Welt [Dynamic Pricing in a Digitized World]," Schmalenbach Journal of Business Research, Springer, vol. 72(3), pages 321-342, September.
    6. Jianyu Xu & Dan Qiao & Yu-Xiang Wang, 2022. "Doubly Fair Dynamic Pricing," Papers 2209.11837, arXiv.org.
    7. Pizzi, Gabriele & Vannucci, Virginia & Shukla, Yupal & Aiello, Gaetano, 2022. "Privacy concerns and justice perceptions with the disclosure of biometric versus behavioral data for personalized pricing tell me who you are, I’ll tell you how much you pay. Consumers’ fairness and p," Journal of Business Research, Elsevier, vol. 148(C), pages 420-432.
    8. Cui, Yuanyuan (Gina) & van Esch, Patrick & Das, Gopal & Jain, Shailendra, 2022. "“Surge price precision and political ideology”," Journal of Business Research, Elsevier, vol. 143(C), pages 214-224.
    9. Nunan, Daniel & Di Domenico, MariaLaura, 2022. "Value creation in an algorithmic world: Towards an ethics of dynamic pricing," Journal of Business Research, Elsevier, vol. 150(C), pages 451-460.
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