Explorations in Price (Un)Fairness

Consumers may use multiple reference points-including cost of goods, past prices, and competitive prices-to judge price fairness. Across a series of studies we show that consumers are inclined to overestimate profits, often to an extreme extent. We further demonstrate that prices are perceived to be unfair because consumers fail to take into account vendor costs, underestimate the effects of inflation, and attribute competitive price differences to profits. Potential corrective interventions by marketers-such as cueing costs, providing historical price information, and explaining price differences-were insufficient to eliminate unfairness perceptions. ill addition, prices for goods were found to be stickier than prices for services and therefore were especially susceptible to these systematic perceptions of unfairness