You Deserved That: The Roles of Purchase Effort and Loyalty in Explaining Price Inequality Outcomes

Abstract

The proliferation of social media has made it easier than ever for customers to compare the prices they have paid for products and services, in addition to how they come across “deals.” Price fairness judgments have been shown to be influenced by consumers’ comparisons to other consumers, or referents, regarding the prices paid by each for the same or similar products, with the prevailing sentiment being that it is unfair for one customer to receive a better price than another customer for the same product purchased from the same retailer. The current work examines how referent effort and referent loyalty influence referent deservingness perceptions and serve to justify price inequality in such a scenario. In three experiments, we demonstrate a consistent process through which customer purchase efforts serve to influence evaluations of a customer’s deservingness to receive a lower price, ultimately explaining evaluations of price fairness in consumption scenarios where one customer pays a lower price than another customer for the same product. The theoretical and managerial implications of these findings are discussed.