Consumer Perceptions of Price (Un)fairness

A series of studies demonstrates that consumers are inclined to believe that the selling price of a good or service is substantially higher than its fair price. Con-sumers appear sensitive to several reference points—including past prices, com-petitor prices, and cost of goods sold—but underestimate the effects of inflation, overattribute price differences to profit, and fail to take into account the full range of vendor costs. Potential corrective interventions—such as providing historical price information, explaining price differences, and cueing costs—were only mod-estly effective. These results are considered in the context of a four-dimensional transaction space that illustrates sources of perceived unfairness for both individual and multiple transactions. Fine restaurants gouge consumers, as evidenced by wineprices that are multiples of the going retail rate. Music on the internet should be freely shared because the recording industry is rapacious in its pricing. Gasoline prices are ex-orbitant because they are determined more by industry col-lusion than market forces. Pharmaceutical prices should b