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Cited by 242Consumer Market Behavior and PricingCustomer Service Quality and LoyaltyConsumer Behavior in Brand Consumption and Identification

Dynamic pricing in internet retail: Effects on consumer trust

Garbarino, Ellen, Lee, Olivia F.·2003·Psychology & Marketing
DOI 10.1002/mar.10084
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Abstract

Abstract Individual‐level price discrimination, while not a new idea, is more than a theoretical possibility in the Internet age. Economic theory argues that dynamic pricing (i.e., individual‐level price discrimination) is inherently good for the profitability of the firm, because it allows the firm to capture a larger share of the consumer surplus, but anecdotal evidence from recent retail experiments with Internet‐based dynamic pricing suggests that consumers react strongly against this practice. Using a two‐dimensional conceptualization of trust, based on benevolence and competence trust, the current experiment examines how the experience of a dynamic pricing event and the direction of the pricing discrimination (i.e., whether one is offered the higher or the lower price) affects both the mean levels of trust and the weight given to the separate trust dimensions in the formation of overall trust. Because demand‐based pricing, such as dynamic pricing, is generally considered unfair, it is expected that trust levels will be lower and that more weight will be given to benevolence trust. Results show that mean benevolence trust is significantly lower (which leads to a marginal decrease in overall trust) and the weight given to benevolence trust in the formation of overall trust substantially increases. The direction‐of‐price‐discrimination effects are generally unsupported. © 2003 Wiley Periodicals, Inc.

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  • Ethical concerns about personalized pricing include decreased trust, price unfairness, loss of personal freedom, privacy loss, unequal distribution of power, and welfare loss.

    “The debate about personalized pricing has been fed by ethical concerns, such as a decrease in trust (Garbarino and Lee 2003), price unfairness (Richards et al. 2016), loss of personal freedom (Bock 2016), privacy loss (Zuiderveen Borgesius and Poort 2017), unequal distribution of power (Seele et al. 2019), and welfare loss (Li et al. 2020).”

    From A note on the future of personalized pricing: cause for concern (2020) · cites this paper as Garbarino and Lee 2003

  • Consumers who perceive a pricing practice to violate a social norm react negatively towards the company, such as lower purchase intentions and loss of trust.

    “Consumers that perceive a pricing practice to violate a social norm, react negatively towards the company, such as lower purchase intentions (Campbell, 1999) and loss of trust (Garbarino & Lee, 2003).”

    From Discrimination grounds and personalised pricing: Consumer perceptions of fairness, norm alignment, legality, and trust in markets (2024) · cites this paper as Garbarino & Lee, 2003

  • Unfairness perceptions may lead to decreased consumer trust in the digital market and less intention to participate in the digital market.

    “Unfairness perceptions, in turn, may have far-reaching consequences, such as a decrease in consumers' trust in the digital market, as well as less intention to participate in the digital market (Garbarino & Lee, 2003).”

    From Discrimination grounds and personalised pricing: Consumer perceptions of fairness, norm alignment, legality, and trust in markets (2024) · cites this paper as Garbarino & Lee, 2003

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Authors
Garbarino, E., & Lee, O. F.
Affiliations
  • Case Western Reserve University (US)
  • Cleveland State University (US)
Corresponding author
Garbarino, Ellen
ORCID
Garbarino, Ellen
Venue
Psychology & Marketing
Publisher
Wiley
Published
2003-05-06
Volume
20
Issue
6
Pages
495-513
ISSN
  • 0742-6046 (ISSN-L)
  • 1520-6793
DOI
10.1002/mar.10084
OpenAlex
W2053907941
Cited by
242
References
39
Citations by year
2026: 8 · 2025: 14 · 2024: 14 · 2023: 13 · 2022: 21 · 2021: 12 · 2020: 23 · 2019: 11 · 2018: 9 · 2017: 15 · 2016: 8 · 2015: 10 · 2014: 11 · 2013: 4 · 2012: 10
FWCI
19.79
Type
journal article
Language
en
Open access
closed
Licence
onlinelibrary.wiley.com/termsAndConditions#vor (vor)
Locations
Psychology and Marketing (publishedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Marketing › Consumer Market Behavior and Pricing
  • Social Sciences › Business, Management and Accounting › Organizational Behavior and Human Resource Management › Customer Service Quality and Loyalty
  • Social Sciences › Business, Management and Accounting › Marketing › Consumer Behavior in Brand Consumption and Identification
Keywords
dynamic pricing, price discrimination, consumer trust, competence trust, online retail, consumer surplus, perceived injustice, demand-based pricing, online shopping

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