All is (not) fair in personalized pricing: antecedents and outcomes of consumer fairness perceptions

Personalized pricing entails the practice of setting different prices for consumers based on consumer data. Despite its profitability, the practice provokes strong negative fairness perceptions among consumers. This paper provides insights into (un)fairness perceptions and consequences of different variations of personalized pricing (higher/lower price and segmentation base). The results of the experimental study indicate that consumers judge the fairness of personalized pricing along the lines of distributive and procedural fairness and that consumer cynicism influences this process. Perceptions of norm alignment explain why some price differences and segmentation bases are judged fairer than others. Moreover, price unfairness perceptions relate to a variety of negative behavioral, attitudinal, and emotional reactions.