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

Open access
Priester, Anna, Robbert, Thomas, Roth, Stefan·2020·Journal of Revenue and Pricing Management
DOI 10.1057/s41272-019-00224-3
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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.

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  • Empirical research and anecdotal evidence indicate that discriminatory pricing often meets with resistance from consumers, who generally view the practice as unfair and illegitimate.

    “Empirical research and anecdotal evidence indicate that discriminatory pricing often meets with resistance from consumers.They generally view the practice as unfair and deem it to be illegitimate (Poort & Zuiderveen Borgesius, 2019;Turow et al., 2005;Priester et al., 2020).”

    From Discrimination grounds and personalised pricing: Consumer perceptions of fairness, norm alignment, legality, and trust in markets (2024) · cites this paper as Priester et al., 2020

    The paper’s Abstract (page unavailable) says personalized dynamic pricing provokes strong negative fairness perceptions, and its Future research directions section reports rejection of pricing based on customer profiles. But the PDP and fairness perceptions section also describes forms of discriminatory pricing consumers regard as fair. The source therefore supports resistance to some forms, not the broader claim that consumers generally deem discriminatory pricing unfair and illegitimate. (LLM, conf=0.84)

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  • Our findings are consistent with previous findings that personalised pricing is generally viewed by the public as unfair and illegitimate.

    “Our findings are consistent with previous findings and observations that personalised pricing is generally viewed by the public as unfair and illegitimate (Poort & Zuiderveen Borgesius, 2019;Turow et al., 2005, Priester et al., 2020).”

    From Discrimination grounds and personalised pricing: Consumer perceptions of fairness, norm alignment, legality, and trust in markets (2024) · cites this paper as Priester et al., 2020

    The Discussion reports that study participants judged prices tailored to individuals as less fair than prices set for consumer segments. That supports the fairness concern, but the finding is comparative and does not establish that the public generally views all personalised pricing as unfair. The paper does not report a judgment that it is illegitimate. (LLM, conf=0.86)

    Experimental — accuracy not yet measured

  • Pricing based on location is deemed less fair than purchase history as a discriminatory ground.

    “Pricing based on location, in turn, is deemed less fair than purchase history as a discriminatory ground (Priester et al., 2020).”

    From Discrimination grounds and personalised pricing: Consumer perceptions of fairness, norm alignment, legality, and trust in markets (2024) · cites this paper as Priester et al., 2020

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Cites

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1 of the 79 references couldn’t be matched to a known paper.

Research works printed but not linked: 4

  1. Aydin, G., and S. Ziya. 2009. Personalized dynamic pricing of limited inventories. Operations Research 57 (6): 1523-1531.
  2. Campbell, M.C. 1999. "Why did you do that?" The important role of inferred motive in perceptions of price fairness. Journal of Prod- uct & Brand Management 8 (2): 145-153.
  3. Valentino-DeVries, J., J. Singer-Vine, and A. Soltani. 2012. Websites vary prices, deals based on users' information. Wall Street Journal 10: 60-68.
  4. Varian, H.R. 1989. Price discrimination. In Handbook of industrial organization, ed. R. Schmalensee, M. Armstrong, R.D. Willig, and R.H. Porter, 597-654. Amsterdam: Elsevier.

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Authors
Priester, A., Robbert, T., & Roth, S.
Affiliations
University of Kaiserslautern (DE)
Corresponding author
  • Priester, Anna
  • Robbert, Thomas
  • Roth, Stefan
Venue
Journal of Revenue and Pricing Management
Publisher
Springer Science and Business Media LLC
Published
2020-01-23
Volume
19
Issue
2
Pages
99-112
ISSN
  • 1476-6930 (ISSN-L)
  • 1477-657X
DOI
10.1057/s41272-019-00224-3
OpenAlex
W3001465537
Cited by
90
References
79
Citations by year
2026: 16 · 2025: 18 · 2024: 17 · 2023: 11 · 2022: 19 · 2021: 5 · 2020: 4
FWCI
10.05
Type
journal article
Language
en
Open access
Licence
Locations
  • Journal of Revenue and Pricing Management (publishedVersion, cc-by)
  • RePEc: Research Papers in Economics (submittedVersion)
  • Econstor (Econstor) (submittedVersion, cc-by)
  • Publication Server of Kaiserslautern University of Technology (Kaiserslautern University of Technology) (submittedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Marketing › Consumer Market Behavior and Pricing
  • Social Sciences › Business, Management and Accounting › Management Information Systems › Supply Chain and Inventory Management
  • Social Sciences › Business, Management and Accounting › Organizational Behavior and Human Resource Management › Customer Service Quality and Loyalty
Keywords
perceived fairness, customer segmentation, location-based pricing, privacy concerns, consumer privacy, price discrimination

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