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. Consumers appear sensitive to several reference points--including past prices, competitor 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 modestly 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. Copyright 2003 by the University of Chicago.