The identification of social norms of price discrimination on the internet

Abstract

Purpose The purpose of this paper is to identify some of the current social norms of pricing that constrain sellers' discriminatory pricing on the internet. Violations of such social norms can lead to perceptions of price unfairness and swift and potentially damaging negative reactions from consumers. This paper seeks to demonstrate a state‐of‐the‐art technique for assessing social norms, to identify current norms using a large representative sample of US consumers and to distinguish between social norms and personal beliefs. Design/methodology/approach The study involves an online survey of 387 respondents. The survey was designed to measure both the consensus and the strength of consumer reaction to seller behaviors. To establish that a behavior is the norm, the consensus has to be greater than a 65 percent agreement and the strength of the response has to be significantly different from neutral. Both personal beliefs and perceptions of society's beliefs were collected. Findings The paper finds that some of the social norms constraining discriminatory pricing on the internet are as follows: a seller should charge the same price for a given item to all customers; a seller should not charge a higher price to either more loyal or more frequent customers; a seller should not charge more to new or infrequent customers; and a seller should not charge less to infrequent purchasers. In addition, although it is not established as a norm, a surprising 50 percent of the respondents th…