Journal of Business Research 143 (2022) 346–365

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Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

Seeking the perfect price: Consumer responses to personalized price

discrimination in e-commerce
Gerrit Hufnagel , Manfred Schwaiger *, Louisa Weritz
Ludwig-Maximilians-Universität, Munich, Germany
Institute for Market-Based Management, Munich School of Management, Ludwig-Maximilians-Universität, Munich, Germany

A R T I C L E I N F O A B S T R A C T

Keywords: This paper presents an empirical analysis of propositions concerning the consequences of price (un)fairness
Personalized pricing perceptions in personalized pricing based on individual consumer characteristics or customers’ previous pur­
Dynamic pricing chase behavior. In three online experiments, we analyze consequences of personalized pricing for price-favored
Price fairness perceptions
and price-disadvantaged customers in an e-commerce setting. Results reveal negative attitudinal and behavioral
E-commerce
reactions to personalized pricing for both disadvantaged and even favored customers, mediated by price fairness
perceptions. Respondents’ aversion to personalized pricing is confirmed by a second study applying a within-
subject design. In addition, we evaluate consumers’ responses to various levels of information sensitivity in
personalized pricing mechanisms and find that consumers generally refuse personalized pricing approaches
regardless of the underlying personal data1.

1. Introduction the exponentially increasing computing power of computer chips enable

companies to use real-time data analysis in their pricing process for price
The Internet has facilitated information flow for both buyers and discrimination purposes (Dixit, Braunsberger, Zinkhan, & Pan, 2005;
sellers. Buyers benefit as they can find product information easier than Garbarino & Maxwell, 2010). The combination of individual consumer
ever before. On the other hand, sellers benefit, as they are able to employ data and situational circumstances (e.g., time, location, hardware used)
a variety of pricing practices that previously have not been cost-effective enables companies to set personalized prices. Ideally, companies can
in the consumer setting (Garbarino & Maxwell, 2010). One of the pricing thus record the individual willingness to pay of each consumer and fully
practices to exploit consumers’ heterogeneous price sensitivity, to in­ exploit it (Iyer et al., 2002; Martin, Ponder, & Lueg, 2009).
crease sales and profits, is dynamic pricing (Sahay, 2007). Dynamic Looking at the price as profit lever, using personalized prices to in­
pricing based on the time of booking or the current supply and demand crease the overall price level in an online shop has tremendous potential.
situation has already been introduced for a large number of products and Increasing the average price level by just 1%, given constant outputs,
services (e.g. business travelers are often charged higher prices for hotel would lead to an increase in operating profit of around 11% and thus
and flight bookings than private travelers because they make their exceed the effects of a 1% increase in volume by more than factor three
bookings later in time (Obermiller, Arnesen, & Cohen, 2012)). While (Marn & Rosiello, 1992). Hence, personalized pricing promises immense
dynamic prices change over time in response to volatility in supply and potential for profit maximizing companies. The application of data-
demand or the competitive environment, prices can also be increasingly based price discrimination (in real time) may thus create an imbal­
personalized based on consumer data (Iyer, Miyazaki, Grewal, & Gior­ ance in the market for the benefit of the supply side by predicting
dano, 2002). Individual consumers can be tracked and targeted based customer preferences and their individual price sensitivities; but it may
on, for example, their browsing history, and actions taken accordingly, also cause serious problems for firms (Elmaghraby & Keskinocak, 2003;
while user registrations and social media profiles provide additional Kung, Monroe, & Cox, 2002; Sahay, 2007). In 2000, the online giant
customer information (Obermiller et al., 2012). New technologies and Amazon made a first attempt to personalize prices in its online store

* Corresponding author at: Institute for Market-Based Management, Munich School of Management, Ludwig-Maximilians-Universität, Kaulbachstr. 45/I, 80539
Munich, Germany.
E-mail addresses: [email protected] (G. Hufnagel), [email protected] (M. Schwaiger), [email protected] (L. Weritz).
1
We would like to thank the anonymous reviewers for their valuable input. The paper has benefitted from it a great deal.

https://doi.org/10.1016/j.jbusres.2021.10.002
Received 19 December 2019; Received in revised form 29 September 2021; Accepted 3 October 2021
Available online 9 February 2022
0148-2963/© 2021 Elsevier Inc. All rights reserved.
G. Hufnagel et al. Journal of Business Research 143 (2022) 346–365

(Streitfeld, 2000). Amazon was accused of identifying existing cus­ empirical evidence of the consequences of price discrimination for both
tomers by means of cookies and of evaluating a customer’s previous favored and disadvantaged customers (Study 1). Section 4 (Study 2)
shopping behavior to discriminate prices for a DVD between loyal cus­ then serves as a robustness check for our central findings in Study 1. In
tomers and new customers (Huang, Chang, & Chen, 2005; Rosencrance, Section 5 we manipulate the degree of information sensitivity (Study 3),
2000). When consumers discovered Amazon’s pricing strategy, their before we conclude with theoretical and managerial implications as well
complaints were soon picked up by the media. The extremely negative as limitations and further research suggestions (Section 6).
media coverage led Amazon to discontinue their innovative price
discrimination approach immediately (Streitfeld, 2000). The Amazon 2. Literature review and hypotheses
example suggests that firms face a dilemma: While data-based price
discrimination can increase profitability, it could also alienate cus­ Price fairness, as perceived by consumers, is a central driver of the
tomers by arousing unfairness perceptions (Xia, Monroe, & Cox, 2004). acceptance of dynamic and personalized pricing offers, and leads to
Previous studies have indicated that consumers’ acceptance of a immediate changes in consumer behavior (Dickson & Kalapurakal,
price relies on their perception of its fairness (Cox, 2001; Kahneman, 1994). Perceived unfairness results in lower benevolence trust, lower
Knetsch, & Thaler, 1986; Maxwell, 2002). Price fairness is defined as the likelihood to purchase from this retailer, higher willingness to spread
judgment about whether a transaction or the process of concluding a negative WOM, both privately and publicly, and increased engagement
transaction is reasonable, acceptable, or just (Bolton, Warlop, & Alba, in additional search activities (Garbarino & Maxwell, 2010; Lii and Sy
2003). Research has shown that consumers respond to a price-setting 2009). In addition, if the magnitude of perceived price unfairness rea­
practice that is perceived to be unfair with negative attitudinal and ches a certain level, customers may choose to complain, ask for a refund,
behavioral reactions (Haws and Bearden 2006; Huang et al., 2005; and/or leave the seller (Xia et al., 2004) to protect themselves from
Maxwell & Garbarino, 2010). Perceived unfairness leads to distrust and being taken advantage of in the future and/or to take revenge by
diminished shopping intentions, both offline and online (Campbell, harming the seller. Customers want to offset disparities resulting from
1999; Huang et al., 2005; Kahneman et al., 1986; Lii & Sy, 2009). unequal input–output ratios by exercising adverse behaviors to produce
Furthermore, price unfairness fosters switching behavior (Garbarino & internal consistency (Samuelson and Zeckhauser 1988).
Maxwell, 2010; Grewal, Hardesty, & Iyer, 2004) and negative word-of- Consumers generally prefer constant prices over price discrimination
mouth, both privately and publicly (Lii & Sy, 2009; Malc, Mumel, & (Huang et al., 2005). The latter is considered particularly unfair if new
Pisnik, 2016). customers receive better prices than existing/loyal customers (Bolton
Price fairness perceptions have been extensively discussed in mar­ et al., 2010; Darke and Dahl 2003; Maxwell and Garbarino, 2010; Tsai
keting and economics literature across various contexts (Grewal & and Lee, 2007).
Compeau, 1999; Wu et al., 2012). Given that its importance has further Consumers evaluate the fairness of a price both consciously and
increased with technological developments, an evolving research stream unconsciously based on at least one reference price (Xia et al., 2004),
investigates the effects of price discrimination tactics in an online which depends on historical or competitive prices, or prices paid by
context. However, these studies have targeted the impact of price other consumers. This relationship is moderated by transaction simi­
discrimination only one-dimensionally by concentrating mainly on larity, a company’s motives for the price change, a customer’s prior trust
customers that are disadvantaged by a certain price discrimination in the company as well as the customer’s knowledge, beliefs, loyalty,
tactic. To understand the holistic effects and the associated implications and social norms. Customers perceive a price disadvantage compared to
for consumer behavior, changes in attitudes and behavior for both another customer group as less unfair if they have a high level of trust in
disadvantaged and favored consumers must be assessed. Thus, we the company, if the company sticks to social norms, or if the company
address this shortcoming by incorporating both customers that are has a justified motive to increase its prices (Victor et al., 2019; Xia et al.,
favored by price discrimination and those who are disadvantaged by 2004).
such a practice. The theory of procedural justice (Lind & Tyler, 1988) relates to the
In addition, prior research largely focused on purchase-timing-based process through which outcomes are obtained. Consumers evaluate
and purchase-frequency-based price discrimination and paid little whether the transaction partner adheres to “fair” rules or standards in
attention to other innovative discrimination approaches, such as the price setting process and the way in which their price has been
personalized pricing tactics using buyer identification (Lii & Sy, 2009; determined (Xia et al., 2004). Samuelson and Zeckhauser (1988) have
Malc et al., 2016; Wu, Liu, Chen, & Wang, 2012). Empirical findings on shown empirically that people are biased in favor of the status quo.
consumers’ reactions to innovative pricing practices based on personal When new rules (like personalized pricing) are applied, people need
information are scarce (Malc et al., 2016). We follow the call for time to become acquainted with these rules and perceive them to be fair
research by Grewal et al. (2004) or Lii and Sy (2009), as well as by the (Dickson & Kalapurakal, 1994). The social norm theory (Maxwell, 1999)
Marketing Science Institute (Stephen & Lamberton, 2016), and provide may explain perceived fairness in the price setting process (Lind & Tyler,
empirical evidence showing how both favored and disadvantaged cus­ 1988; Tyler, 1989). Fairness in that sense is defined by norms and
tomers react to personalized pricing. Our main contribution is to reveal behavior accepted by society (Maxwell, 1999), and a price change that
that, irrespective of whether consumers benefit from personalized does not comply with the socially accepted standard is perceived as
pricing or not, they react with less favorable behavioral outcomes (e.g. unfair (Dickson & Kalapurakal, 1994). Maxwell and Garbarino (2010)
purchase intention) compared to uniform pricing. We reveal the mech­ identified several corresponding norms: All buyers should be charged
anism underlying this (at least in parts) counter-intuitive result by the same price for a given product at the same time; a seller should not
showing that perceived price-unfairness causes the behavioral pattern make use of loyal or frequent customers by charging them higher rates
and that the sensitivity of information used to personalize prices plays or charge a higher price to infrequent or new customers; and a seller
only a minor role. should also reject favoring infrequent customers with lower prices
While our empirical evidence adds to the body of knowledge in the (Maxwell & Garbarino, 2010). Haws and Bearden (2006) state that
academic field, practitioners may learn to include changes in loyalty and consumers accept different prices at different sellers, but they perceive
customer patronage in their simulations of the effects of a switch to different prices at the same seller as unfair. Additionally, price differ­
personalized price discrimination, rather than just focusing on margin ences are perceived as more unfair if they occur in close temporal
calculations coming from different prices. proximity. These effects hold for both positive and negative price de­
Our study is organized as follows: In Section 2 we illustrate the state viations (Haws and Bearden 2006; Lii and Sy, 2009).
of the art in research and discuss the interplay of personalized price A first attempt to analyze the effect of dynamic prices in e-commerce
discrimination and information sensitivity. In section 3 we provide on price fairness perceptions was conducted by Grewal et al. (2004).

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Consumers view an Internet retailer using identification tactics as less that utilizes individual customer data to set prices (see Fig. 2.).
fair than a company using purchase timing as a tactic (Grewal et al., In order to not get an incomplete picture of the effects due to a
2004). The authors suppose that the familiarity consumers have with narrow choice of behavioral or attitudinal outcome variables that would
purchase timing strategies, which are regularly employed by the avia­ create difficulties when deriving implications (Martin et al., 2009), we
tion industry, favors the perceived price fairness of such an approach analyze customers’ reactions to personalized price discrimination from a
(Grewal et al., 2004). In other words: Industry behavior may turn into multidimensional perspective.
norms.
H3: Customers disadvantaged by personalized price discrimination
So far, the impact of dynamic or personalized pricing has mainly
show a) lower price fairness perceptions, b) lower purchase in­
been targeted one-dimensionally, concentrating on customers that are
tentions, c) lower benevolence trust, d) higher intentions to search
disadvantaged by a certain price discrimination tactic (Priester et al.,
for alternative offerings, e) higher private complaint intentions, and
2020; Bolton et al., 2003; Xia et al., 2004). To understand the holistic
f) higher public complaint intentions than customers favored by
effects and the associated implications for consumer behavior, changes
personalized price discrimination.
in attitudes and behavior for both disadvantaged and favored consumers
should be assessed. Early studies indicate that people seem to dislike Research in contexts other than e-commerce showed that the sensi­
online price discrimination even if they are granted discounts (Wang & tivity of collected information, “the level of privacy concern an indi­
Krishna, 2012). vidual feels for a type of data in a specific situation” (Weible, 1993,
We aim to provide a holistic portrayal of the relationship between p. 30), can intensify consumers’ privacy concerns (Niemann &
personalized price discrimination and consumer behavior. Thus, both Schwaiger, 2016; Kehr, Kowatsch, Wentzel, & Fleisch, 2015). The more
favored customers receiving a lower price compared to a uniform price, sensitive the collected information is perceived to be, the higher the
as well as disadvantaged customers receiving a higher price, are studied. perceived risks and the lower the willingness to share information
We expect that price discrimination in e-commerce leads to negative (Malhotra, Kim, & Agrarwal, 2004; Phelps, Nowak, and Ferrell, 2000).
outcomes for both favored and disadvantaged customers. Following several calls for research (Grewal et al., 2004, 2011; Lii and
Sy, 2009), we investigate several types of consumer information to
H1: Relative to uniform prices, price discrimination leads to a) lower
manipulate the sensitivity level of personalized pricing mechanisms: the
price fairness perceptions, b) lower purchase intentions, and c)
devices used by consumers (Hannak, Soeller, Lazer, Mislove, and Wilson,
higher intentions to search for alternative offerings for both favored
2014), their geographical location (Mikians, Gyarmati, Erramilli, and
and disadvantaged customers.
Laoutaris, 2013; Borgesius and Poort (2017)), their past browsing and
Malc et al. (2016) found the largest negative effect of price purchasing behavior (Albarracin & Wyer, 2000; Kang, Hahn, Fortin,
discrimination on consumers’ price fairness perceptions if consumers Hyun, & Eom., 2006; Ouellette & Wood, 1998; Shimp & Kavas, 1984;
compare their prices with the price paid by a close friend. Furthermore, Shimp & Moody, 2000), and information obtained from social media pro­
based on a correlation analysis, they found positive connections be­ files (Youyou et al., 2015).
tween price fairness perceptions and buying intentions, future shopping We predict that the information sensitivity of the personalized
intentions, and negative correlations with respect to switching to other pricing tactic increases consumers’ negative attitudinal and behavioral
sellers, and negative referrals of the seller to others. We aim to enhance reactions:
these findings by analyzing if consumers’ price fairness perceptions are
H4: The information sensitivity of the personalized pricing tactic
the central construct that mediates the relationship between price
increases customers’ negative reactions (i.e. a) lower fairness per­
discrimination and consumer response.
ceptions, b) lower purchase intentions, c) lower trust, d) higher in­
H2: Customers’ negative reactions to price discrimination (i.e., a) tentions to search for alternative offerings, e) higher private
lower purchase intentions, b) higher intention to search for alter­ complaint intentions, and f) higher public complaint intentions) to
native offerings) are mediated by price fairness perceptions. personalized price discrimination.

The first two hypotheses are summarized in our first research In addition, we expect that customers favored and disadvantaged by
framework (Fig. 1). personalized price discrimination are impacted differently by the in­
Previous studies (see Appendix A for an overview) have examined formation sensitivity of the data that is used to discriminate prices.
either random price discrimination (between customers or sellers), time- Because favored customers benefit from a lower price, they do not
based price discrimination (i.e., dynamic pricing), or buyer identifica­ perceive the use of their personal data as severely as those customers
tion in e-commerce (Grewal et al., 2004; Lii & Sy, 2009) – a rather weak who are disadvantaged by price discrimination.
form of personalized pricing. Empirical evidence regarding other forms
H5: The information sensitivity of the data that is used to discrimi­
of personalized pricing based on more sensitive consumer information is
nate prices positively moderates the difference between favored and
missing so far. In the subsequent hypotheses, we shift our focus from
disadvantaged customers and their reactions.
rather generic price discrimination approaches to personalized pricing

Fig. 1. Research Framework Visualizing Hypotheses 1–2.

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Fig. 2. Research Framework Visualizing Hypotheses 3–6.

Lastly, we test if consumers’ price fairness perceptions mediate the Measures

link between personalized pricing and consumer response, and if in­ A comprehensive overview of all measures and sources can be found
formation sensitivity moderates this relationship. in Appendix C. Price fairness perceptions (α = 0.984) were measured
according to Darke and Dahl (2003), Malc et al. (2016), and Martin et al.
H6: There is moderated mediation such that the negative effect of
(2009); purchase intention (α = 979) was captured by a three item scale
price discrimination on customer reactions is moderated by the in­
adapted to our research context (Biswas, Pullig, Yagci, & Dean, 2002;
formation sensitivity of the personalized pricing tactic and mediated
Garbarino & Maxwell, 2010); and future search intention (α = 921) was
by price fairness perceptions.
in line with Grewal, Monroe, & Krishnan (1998). For all items except
demographics, participants indicated their assessments on 7-point Likert
3. Study 1: Consequences of Price Discrimination – Comparing scales or semantic differentials with 1 indicating disagreement or un­
Favored and Disadvantaged Customers desired values (e.g. for purchase intention: 1 is equivalent to a rating of
“extremely unlikely” and 7 to a rating of “extremely likely”). We outline
3.1. Experimental design a corresponding overview of the individual scales, items, and their
ranking in Appendix C.
Study 1 tests hypotheses H1 and H2 to provide empirical evidence Manipulation checks were included to validate that all three sce­
that price discrimination leads to negative reactions of both disadvan­ narios presented were equally realistic2 and that respondents recognized
taged and favored customers, and it identifies the average perceived the price discrimination. Price manipulation was checked by recalling
information sensitivity of five data sources that we need to personalize the own price paid as well as the reference price paid by a friend (single
prices in Study 3. choice questions, adapted from Martin et al., 2009).
Furthermore, participants were asked to rate the perceived infor­
Research design, participants, and procedure mation sensitivity of five data sources that can be employed to person­
We conducted a scenario experiment which contained three different alize prices (Milne, Pettinico, Hajjat, & Markos, 2017). Additionally,
scenarios (Appendix B). Price was the only variable manipulated to respondents were prompted to specify the extent to which they would
separate the scenarios from each other in our between-subject design reveal that information to marketers (Malhotra et al., 2004).
with three experimental groups (same reference price, friend with We included several co-variates to account for individual heteroge­
higher reference price, friend with lower reference price). Participants neity and to increase internal validity. Consumers’ product involvement
were members of Amazon’s crowdsourcing platform Mechanical Turk (α = 0.936) was assessed by using seven items of the 20-item semantic
(MTurk) and were rewarded with $0.80 for taking part. Only workers differential scale suggested by Zaichkowsky (1985). In addition, we
from the United States who completed more than 1,000 tasks with an included scales for Internet usage, frequency and number of online
approval rate greater than 97% were allowed to participate in our study. purchases as well as social media usage, to ensure that the groups do not
As visualized in Appendix B, participants read a randomly assigned differ significantly with regard to these aspects (Doolin, Dillon,
brief scenario that describes a situation where they were buying a Thompson, & Corner, 2005; Malhotra et al., 2004). Finally, the last part
smartphone. The price displayed was a realistic market price, and no of the survey addressed demographics.
brand name was indicated. After the fictitious purchase of the product,
participants realized that they had paid the same, a higher, or a lower Sample description
price than their close friend had (Bolton et al., 2010; Malc et al., 2016). 352 respondents took part in our study3. Respondents who were not
The two price levels include a comparison price 20% higher or 20%
lower to the price paid by the friend (i.e., 20%, which is similar to that
used in previous studies; Garbarino & Maxwell, 2010; Haws and 2
“The scenario presented was easy to understand” and “The scenario presented
Bearden 2006).
seems realistic to me, regardless of the prices stated” (adapted from Mahadevan,
2010).
3
Each MTurk worker could only participate in one batch.

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able to recall the price they paid or the price their friend paid (n = 13) Table 2
were excluded from analysis. Moreover, the data set was freed from Correlations, Means, and Standard Deviations of Study 1
subjects who were identified as fast-clickers,4 and we excluded subjects Variables 1 2 3 4
with incomplete data regarding their demographics, resulting in a final
1 Price Fairness Perceptions 1.000
sample of 307 subjects. However, all significant key results remained 2 Purchase Intention 0.841*** 1.000
significant even when including these. 51% of our subjects are female 3 Future Search Intention -0.259*** -0.293*** 1.000
and age ranges from 22 to 72 years (Mage = 40.96, Mdnage = 39.00). 83% 4 Product Involvement 0.090 0.083 -0.009 1.000
of all subjects are employed full-time, while 8% are unemployed. In
Mean 5.26 4.88 6.13 5.43
addition, 52% of all subjects indicated a gross household income of more Standard Deviation 1.77 1.95 1.08 1.23
than $50,000 per year. Detailed descriptive statistics relating to the
respondents’ characteristics are shown in Appendix D. Note: *** p < .01, ** p < .05, * p < .10; N = 307.
Table 1 shows that the random assignment led to about equal dis­
tribution of participants across the three experimental groups in our
included as covariates. The covariates are discussed only when they
final sample. Median completion time does not differ significantly across
were significant (see Table 3).
groups. In addition, group homogeneity could be assumed based on a set
Price fairness perceptions (see Model 1). Compared to uniform prices,
of Chi-square tests for categorical covariates5 and Kruskal-Wallis tests
we found a strong negative effect of price discrimination on price fair­
for at least ordinally scaled covariates6. We provide correlations and
ness perceptions for disadvantaged customers (B = -3.019, t = -19.696,
descriptives in Table 2.
p < .001). If customers were favored by price discrimination, we
Results of the realism check demonstrate that the scenarios and the
observed a slightly negative effect on their price fairness perceptions (B
prices stated appear equally realistic to the participants between all
= -0.258, t = -1.633, p = .104). While the effect of price discrimination
groups. Results of one-way ANOVAs can be found in Appendix E.
on price fairness perceptions of price-favored customers points in the
hypothesized direction, the significance level is above 10%. Despite this,
Method
we may state support for H1a with reference to Study 2, where we
A set of ordinary least squares (OLS) regressions including mediation
addressed this issue in a within-subject design. Frequency of online
analyses were run to test our hypotheses. The regression analyses were
purchases has a significant positive impact on price fairness perceptions
conducted using IBM SPSS Statistics and the PROCESS macro developed
(B = 0.259, t = 1.789, p = .075). From our results, we infer that both
by Hayes (2018). PROCESS is increasingly used in the marketing liter­
customers who benefit from price discrimination and those who are
ature including moderation and mediation analyses (e.g., Hüttel,
disadvantaged by price discrimination have lower price fairness per­
Schumann, Mende, Scott, & Wagner, 2018; Inman & Nikolova, 2017;
ceptions than customers who pay uniform prices.
Mende, Scott, & Bolton, 2018). The bootstrapping method was applied
Purchase intention (see Model 2). Only customers who are disadvan­
for estimating the relative indirect effects (Hayes, 2018). Compared to
taged by price discrimination have lower future purchase intentions (B
other methods, the bootstrapping method is considered to be more
= -1.421, t = -6.959, p < .001). No significant effect was found for
powerful and to perform best, and it takes into account the irregularities
customers who are favored by a lower price (B = -0.110, t = -0.786, p =
of the sample distribution of the relative indirect effect (Hayes, 2009;
.432). These results only partially support H1b. However, the results of
Zhao, Lynch, & Chen, 2010). We followed Mallinckrodt, Abraham, Wei,
the relative indirect effects (Model 3) show that, compared to uniform
and Russell’s (2006) recommendation of generating at least 10,000
prices, both lower (i.e., favored customers, relative indirect effect =
bootstrap confidence intervals.
-0.166, LLCI = -0.351, ULCI = -0.006) and higher prices (i.e., disad­
vantaged customers, relative indirect effect = -1.942, LLCI = -2.432,
3.2. Results
ULCI = -1.500) lead to significantly lower future purchase intentions,
supporting H2a. In addition, the difference between the relative indirect
In our mediation models (PROCESS model = 4; 10,000 resamples)
effect of favored and disadvantaged customers also proves to be highly
consumers’ purchase intention as well as their future search intention
significant (relative indirect effect = -1.7761, LLCI = -2.221, ULCI =
were used as dependent variables, the reference price as the indepen­
-1.376).
dent variable, and consumers’ price fairness perceptions as a mediator.
Future search intentions (see Model 4). Results reveal that price
Age, gender7, income8, and frequency of online purchases9 were
discrimination leads to higher future search intentions for favored cus­
tomers (B = 0.326, t = 2.257, p = .025) as well as for disadvantaged
Table 1 customers (B = 0.755, t = 3.573, p < .001). Thus, H1c is supported.
Sample Distribution and Median Completion Times across the Experimental However, this effect is not mediated by price fairness perceptions (see
Groups of Study 1.
Model 5 favored customers, relative indirect effect = 0.008, LLCI =
Experimental Scenario N Completion time (Mdn, in -0.019, ULCI = 0.043; disadvantaged customers, relative indirect effect
Group min)
= 0.097, LLCI = -0.202, ULCI = 0.390). Hence, H2b cannot be sup­
1 Same price 110 3.64 ported. Age is the only covariate with a significant impact on future
2 Favored customers 93 3.78 search intention (B = 0.013, t = 2.202, p = .028; see Model 4 in Table 3).
3 Disadvantaged 104 3.66
Perceived Information Sensitivity. A repeated measures ANOVA was
customers
Total 307 3.68 used to test differences in perceived information sensitivity of multiple
data types and consumers’ willingness to reveal those data types to
marketers. The Huynh-Feldt estimate of the departure from sphericity
4
Participants who took less than half of the median completion time were was ε = 0.861 (see Table 4). Perceived data sensitivity was significantly
screened out. affected by data types, F(3.445,1054.086) = 118.243, p < .001. Results of
5
Gender, education, employment status, and social media usage. the pairwise comparisons of group means (Bonferroni tests) are visual­
6
Product involvement, age, income, Internet usage, frequency, and amount ized in Table 5, and showed significant differences (p < .001) in means
of online purchases. of perceived data sensitivity for all data types, except for two compari­
7
Dummy coded: 0 = male, 1 = female. sons, namely geographical location versus past shopping behavior (Mdiff =
8
Dummy coded: 0 = less than $50,000, 1 = equal or above $50,000. -0.225, p = .253) and past browsing behavior versus social media data
9
Dummy coded: 0 = less than weekly online purchases, 1 = at least weekly (Mdiff = 0.088, p = 1.000) (see Table 5).
online purchases.

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Table 3
Mediation Analysis Study 1
Model 1: Mediator Variable – Price Fairness Perceptions Model 2: Mediation Model – Purchase Intention

Variables B SE t-Value p-Value Variables B SE t-Value p-Value

Constant 5.769 0.280 20.636 0.000 Constant 1.723 0.383 4.504 0.000
Favored customer − 0.258 0.158 − 1.633 0.104 Favored customer − 0.110 0.140 − 0.786 0.432
Disadvantaged customer − 3.019 0.153 − 19.696 0.000 Disadvantaged customer − 1.421 0.204 − 6.959 0.000
Price Fairness Perceptions 0.643 0.051 12.663 0.000
Covariates Covariates
Age 0.010 0.006 1.530 0.127 Age 0.009 0.006 1.612 0.108
Gender 0.106 0.129 0.820 0.413 Gender − 0.121 0.114 − 1.068 0.287
Income 0.145 0.131 1.106 0.270 Income − 0.104 0.115 − 0.905 0.366
Frequency of Online Purchases 0.259 0.145 1.789 0.075 Frequency of Online Purchases 0.165 0.128 1.287 0.199

R-square 0.611 R-square 0.754

F 78.639 F 130.577
d.f.1/d.f.2 6/300 d.f.1/d.f.2 7/299
p-value 0.000 p-value 0.000

Model 3: Relative Indirect Effect Through Price Fairness Perceptions on

Purchase Intention

Effect BootSEa LLCIb ULCIb

Favored customer − 0.166 0.088 − 0.351 − 0.006

Disadvantaged − 1.942 0.235 − 2.432 − 1.500
customer

Model 4: Mediation Model – Future Search Intention Model 5: Relative Indirect Effect Through Price Fairness
Perceptions on Future Search Intention

Variables B SE t-Value p-Value Variables Effect BootSEa LLCIb ULCIb

Constant 5.406 0.396 13.649 0.000 Favored customer 0.008 0.015 − 0.019 0.043
Favored customer 0.326 0.144 2.257 0.025 Disadvantaged customer 0.097 0.150 − 0.202 0.390
Disadvantaged customer 0.755 0.211 3.573 0.000
Price Fairness Perceptions − 0.032 0.053 − 0.612 0.541
Covariates
Age 0.013 0.006 2.202 0.028
Gender − 0.034 0.118 − 0.289 0.773
Income − 0.015 0.119 − 0.128 0.898
Frequency of Online Purchases 0.174 0.133 1.312 0.191

R-square 0.134
F 6.632
d.f.1/d.f.2 7/299
p-value 0.000

Note: N = 307.
a
Standard errors from the mean result of bootstrapping procedure.
b
LLCI/ULCI = lower-/upper-level of bias corrected bootstrap 95%-confidence interva l.

Willingness to reveal information. The Huynh-Feldt estimate of sphe­ comparisons of group means revealed significant differences (p < .001)
ricity showed a substantial deviation (ε = 0.778) between data types. for all comparisons of data types, except for past browsing behavior versus
Participants’ willingness to reveal information was significantly affected social media data (Mdiff = 0.130, p = .858). The mean values for both
by data types, F(3.110,951.713) = 183.407, p < .001. Again, pairwise variables are displayed in Table 6.
Based on the results of this study, three data types for implementing
personalized price discrimination were selected for Study 3: consumers’
Table 4 device used (low information sensitivity), their geographical location
Mauchly’s Sphericity Test of Study 1 (medium information sensitivity), and their past browsing behavior (high
Huynh-Feldt F Sig. information sensitivity).
Perceived Information Sensitivity 0.861 118.243 0.000
Willingness to Reveal Information 0.778 183.407 0.000 Table 6
Note: *** p < .01, ** p < .05, * p < .10; N = 307. Mean Values of Perceived Information Sensitivity and Willingness to Reveal
Information by Data Types of Study 1

Table 5 Data Type M SD

Pairwise Comparison: Insignificant Group Mean Differences of Study 1 Perceived Data Sensitivity Device used 3.70 1.84
Geographical location 4.98 1.77
M_diff Sig.
Past browsing behavior 5.71 1.58
Geographical Location vs. Past − 0.225 0.253 Past shopping behavior 5.20 1.64
Perceived Information Shopping Behavior Social media data 5.62 1.53
Sensitivity Willingness to Reveal Information Device used 4.44 1.86
Past Browsing Behavior vs. Social 0.088 1.000
Geographical location 3.56 1.96
Media Data
Past browsing behavior 2.19 1.54
Willingness to Reveal Past Browsing Behavior vs. Social 0.130 0.858 Past shopping behavior 2.78 1.74
Information Media Data Social media data 2.06 1.49

Note: *** p < .01, ** p < .05, * p < .10; N = 307. Note: N = 307.

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4. Robustness check - Study 2 Table 8

Mean Differences of Study 2
4.1. Experimental design Perceived Mdiff p-
Fairness Value
Research design, participants, and procedure Scenario 1 (Static Pricing) Scenario 2 2.760*** 0.000
Study 2 serves as a robustness check for our results from Study 1. This Scenario 3 1.014*** 0.000
time, a within-subject design was chosen to complement our initial Scenario 2 (Disadvantaged Scenario 3 − 1.745*** 0.000
approach. Moreover, it is more naturally aligned with our theoretical Personalized Pricing)
Purchase
mindset of consumers’ reaction to different pricing strategies. The Intention
confrontation with different pricing strategies (as opposed to only one Scenario 1 (Static Pricing) Scenario 2 2.849*** 0.000
strategy in a between-subject design) makes it easier for customers to Scenario 3 0.904*** 0.000
compare and react accordingly. In addition, a within-subject design Scenario 2 (Disadvantaged Scenario 3 − 1.945*** 0.000
Personalized Pricing)
increases the internal validity and statistical power of the analysis
Future Search
(Charness, Gneezy & Kuhn, 2012). Intention
The study’s main purpose is to provide further empirical support of Scenario 1 (Static Pricing) Scenario 2 − 0.675*** 0.000
the influence of personalized pricing on perceived fairness. In other Scenario 3 − 0.111 0.281
words, this study serves to support a significant negative direct effect of Scenario 2 (Disadvantaged Scenario 3 0.564*** 0.000
Personalized Pricing)
personalized pricing on perceived fairness for both types of consumers
(advantaged vs. disadvantaged). Again, subjects were recruited via Note: *** p < .01, ** p < .05, * p < .10; N = 440.
MTurk with the same selection criteria as before.
As in the first study, a scenario experiment was conducted, con­ 4.2. Results
taining three different scenarios similar to the ones used for Study 1.
Consistent with the within-subject design, each participant was pre­ A repeated measures ANOVA was used to test the mean differences of
sented with all three of the scenarios in randomized order (same refer­ our three focus variables (perceived fairness, purchase intention, and
ence price, friend with higher reference price, friend with lower future search intention) based on the different scenarios presented.
reference price). Appendix F displays the applied scenarios for our Scenario 1 refers to static pricing, scenario 2 to the disadvantaged
within-subject design. personalized pricing, and scenario 3 to the advantaged personalized
pricing.
Measures Perceived fairness. Results of the pairwise comparisons of group
Consistent with our replication intent, we used the same validated means (Bonferroni tests) are visualized in Table 8 and show significant
scales as before. An overview of the different variables we used, and differences (p < .001) for all three scenarios, in perceived fairness be­
their respective internal consistency reliability, is provided in Appendix tween scenario 1 versus scenario 2 (Mdiff = 2.76, p < .001), between
C. Internal consistency for all reflective multi-item scales exceeded α = scenario 1 versus scenario 3 (Mdiff = 1.01, p < .001), and between sce­
0.80. Furthermore, the same manipulation checks as in Study 1 were nario 2 versus scenario 3 (Mdiff = -1.75, p < .001).
used to ensure that the scenarios presented appeared realistic and that Purchase intention. Again, Bonferroni tests (summarized in Table 8)
respondents recognized the price discrimination. show significant differences (p < .001) for all three scenarios, in pur­
chase intention between scenario 1 versus scenario 2 (Mdiff = 2.85, p <
Sample description .001), between scenario 1 versus scenario 3 (Mdiff = 0.904, p < .001), and
A total of 614 survey responses were collected. We freed the sample between scenario 2 versus scenario 3 (Mdiff = -1.95, p < .001).
from identified fast-clickers10 and respondents who could not remember Future search intention. Bonferroni tests (summarized in Table 8)
either the price they paid or the price their friend paid, resulting in a show significant differences (p < .001) in future search intention be­
final sample of 440 subjects. 46% of our subjects were female, age tween scenario 1 versus scenario 2 (Mdiff = -0.675, p < .001) and between
ranged from 18 to 77 years (Mage = 40.34, Mdnage = 38.00). 48% of all scenario 2 versus scenario 3 (Mdiff = 0.564, p < .001). No significant
subjects indicated a gross household income of more than $50,000 per differences were found between scenario 1 and scenario 3 (Mdiff =
year. -0.111, p = .281).
Correlations and descriptives of our focal variables are provided in These results support the notion that, irrespective of whether con­
Table 7. sumers benefit from personalized pricing or not, personalized pricing
has a significant negative effect on consumers’ perceived fairness.
Results of a mediation analysis using Hayes’ PROCESS macro (Hayes,
Table 7 2018) provide further support for our assumption. Compared to static
Correlations, Means, and Standard Deviations of Study 2 pricing, we can confirm a strong negative and direct effect of price
discrimination on price fairness perceptions for both disadvantaged
Variables 1 2 3 4
customers (B = -2.76, t = -26.928, p < .001) and advantaged customers
1 Price Fairness Perceptions 1.000 (B = -1.014, t = -9.897, p < .001). Therefore, we empirically confirm the
2 Purchase Intention 0.731*** 1.000
3 Future Search Intention − 0.084* − 0.033 1.000
negative impact even for advantaged personalized pricing on perceived
4 Product Involvement 0.287*** 0.396*** 0.163*** 1.000 fairness, which was initially only assumed in Study 1.

Mean 4.81 4.64 5.85 5.59 5. Study 3: Consumer reactions to Data-Based personalized price
Standard Deviation 1.01 1.09 0.97 1.21
discrimination
Note: *** p < .01, ** p < .05, * p < .10; N = 440.
5.1. Experimental design

Research design, participants, and procedure

Study 3 tests H3-H6 featuring a 2 (price-change-direction: favored
10
Participants who took less than half of the median completion time were vs. disadvantaged customer) × 3 (personalized pricing tactic: low,
screened out. moderate, or high information sensitivity according to the results of

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Study 1) factorial between-subject design. Again, subjects were (30) = 25.917, p = .679), and annual household income (H = 3.717, p =
recruited via MTurk. As in Study 1, only workers from the United States .156). Results of a one-way ANOVA demonstrate that the treatments are
who have completed more than 1,000 tasks with an approval rate of perceived as equally realistic (MRealistic = 5.48) with no significant mean
greater than 97% were allowed to participate. In turn, they were differences between the six conditions (F(5,499) = 0.726, p = .604),
rewarded with $0.90 for taking part. which were easy to understand for the participants (MEasy = 6.72,
First, participants were presented with a base scenario identical to Brown-Forsythe(5,410.850) = 2.095, p = .065). Correlations and de­
the one successfully applied in Study 1. In addition, depending on their scriptives of our focal variables are provided in Table 9.
experimental group, participants randomly received the information
why their price varied (i.e., lower or higher reference price) from the
5.2. Results
price their friend paid (i.e., based on consumer data with low, medium,
or high information sensitivity). Appendix G displays the treatments for
A series of 2 × 3 ANCOVA analyses controlling for perceived infor­
all six experimental groups.
mation sensitivity, general Internet privacy concerns, product involve­
ment, age, gender12, income13, frequency of online purchases14, and
Measures
employment status15 were estimated in order to analyze the effect of the
Appendix C provides an overview of the variables used in this study.
price-change-direction (favored vs. disadvantaged customers) and the
Previously validated scales were utilized and adapted to this research
personalized pricing tactics (based on customers’ devices, their
context if necessary. Established multi-item scales that had also been
geographical location, or their past browsing behavior) on attitudinal
partly applied in Study 1 were used again. All items were captured either
and behavioral reactions. Levene’s test and normality checks were car­
on a 7-point Likert scale or on a seven-point semantic differential scale.
ried out and the assumptions met for each ANCOVA analysis. The group
Internal consistency reliability estimates for all reflective multi-item
means and standard deviations for all dependent variables of interest are
scales were above α = 0.80, indicating reliable measures.
summarized in Table 10.
Dependent variables. Due to the focus on the process of price
Price fairness perceptions. A simple effects analysis shows that disad­
discrimination in the second study, we decided to measure price fairness
vantaged customers have significantly lower price fairness perceptions
perceptions (α = 0.927) using six items to capture both the distributive
(F(1,491) = 238.732, p < .001, B = -1.567). According to Cohen (1973),
(used in Study 1) and the procedural dimension of price fairness per­
the effect size (η2 = 0.327) can be classified as large, supporting H3a. In
ceptions (Martin et al., 2009). The scales used to measure purchase
addition, we found a significant effect of the price personalization tactic
intention (α = 0.976) and future search intention (α = 0.920) were (F(2,491) = 3.658, p = .026, η2 = 0.015). However, pairwise comparisons
identical to those from Study 1. The impact of a personalized pricing
of group means (Bonferroni tests) revealed significant differences only
tactic on consumers’ benevolence trust (α = 956) was assessed using five for the comparison of price discrimination based on the device used vs.
items (Garbarino and Lee, 2003; Garbarino & Maxwell, 2010). Cus­
the geographical location (Mdevice = 3.23 vs. Mlocation = 3.61, p = .028).
tomers’ intention to complain about their experience privately (α = Based on these results, we find no empirical support for H4a. Yet,
0.804) was captured with four items, while their intention to complain
perceived data sensitivity has a significant negative effect on price
publicly (α = 0.857) was assessed by five items (Singh, 1988). fairness perceptions (F(1,491) = 6.380, p = .012, B = -0.100). A possible
The same manipulation checks as in Study 1 were included to vali­
explanation will be discussed in section six.
date that all three scenarios presented were equally realistic and that The two-way interaction between the price-change-direction and the
respondents recognized the price discrimination. In addition, re­
price personalization tactic is non-significant (F(2,491) = 1.290, p =
spondents were prompted to recall the reason for the price difference to
.276). Thus, H5 is not supported.
check the manipulation of the data source used to discriminate prices
Purchase intention. Customers disadvantaged by personalized price
(multiple-choice question).
discrimination have a significantly lower purchase intention than those
We controlled for consumers’ product involvement (α = 0.934), their
who are favored by it (F(1,491) = 87.470, p < .001,B = -1.080), sup­
Internet privacy concerns (α = 0.951), as well as their perceived sensi­
porting H3b. Based on the partial eta square, the effect size is medium
tivity of the personal data that was utilized to discriminate prices (α =
(η2 = 0.151). Moreover, we detected a significant effect of the price
0.904). In addition, as in Study 1, scales for Internet usage, frequency
personalization tactic (F(2,491) = 2.520, p = .081, η2 = 0.010). However,
and number of online purchases, as well as social media usage, were
in contrast to our expectations, pairwise comparisons of group means
included to ensure that the groups do not differ significantly with regard
demonstrated significant differences only for the comparison of price
to these aspects. The last part of the survey addressed demographics.
discrimination based on the device used vs. the geographical location
(Mdevice = 2.47 vs.
Sample description
Mlocation = 2.87, p = .094). Thus, H4b has to be rejected. The two-
We collected a total of 606 survey answers. Respondents who were
way interaction between the price-change-direction and the price
not able to recall the price they paid or the price their friend paid, as well
personalization tactic is significant (F(2,491) = 2.412, p = .091) but small
as those who were not able to recall the reason for the price difference,
in magnitude η2 = 0.010. Customers who are price-disadvantaged
were excluded from analysis. In addition, the data set was freed from
respond more negatively to personalized price discrimination based on
subjects identified as fast-clickers11 and subjects with incomplete data
their geographical location than price-favored customers (B = -0.765, p
regarding their demographics, resulting in a final sample of 505
= .035), but the other comparisons were non-significant, lending partial
subjects.
support for H5. Perceived data sensitivity (B = -0.098, p = .054), general
47% of our subjects are female, and age ranges from 21 to 75 years
Internet privacy concerns (B = -0.192, p = .001), product involvement
(Mage = 40.47, Mdnage = 38.00). 46% of all subjects indicated a gross
(B = 0.127, p = .037), and gender (B = -0.272, p = .084) have a sig­
household income of more than $50,000 per year. Participants’ random
nificant effect on purchase intention.
assignment to the different scenarios can be considered successful.
Future search intention. Results of our ANCOVA show a higher
Across the six experimental conditions, we found no significant differ­
ences regarding age (H = 0.061, p = .970), gender (χ2(5) = 9.181, p =
.102), education (χ2(35) = 29.479, p = .731), employment status (χ2 12
Dummy coded: 0 = male, 1 = female.
13
Dummy coded: 0 = less than $50,000, 1 = equal or above $50,000.
14
Dummy coded: 0 = less than weekly online purchases, 1 = at least weekly
11
Participants who took less than half of the median completion time were online purchases.
15
screened out. Dummy coded: 0 = others, 1 = full-time.

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Table 9
Correlations, Means, and Standard Deviations of Study 3
Variables 1 2 3 4 5 6 7 8 9

1 Price Fairness 1.000

Perceptions

2 Benevolence Trust 0.649*** 1.000

3 Purchase Intention 0.711*** 0.728*** 1.000

4 Future Search -0.202*** -0.264*** -0.288*** 1.000

Intention

5 Private Complaint -0.600*** -0.594*** -0.741*** 0.285*** 1.000

Intention

6 Public Complaint -0.427*** -0.305*** -0.429*** 0.063 0.518*** 1.000

Intention

7 Perceived Data -0.122*** -0.049 -0.103** 0.074* 0.166*** 0.072 1.000

Sensitivity

8 Internet Privacy -0.121*** -0.150*** -0.139*** 0.203*** 0.255*** 0.211*** 0.141*** 1.000
Concerns

9 Product -0.007 0.069 0.058 0.102** 0.075* 0.077* 0.081* 0.063 1.000
Involvement

Mean 3.40 2.45 2.65 6.57 4.96 2.68 4.48 5.55 5.40
Standard Deviation 1.62 1.42 1.85 0.86 1.46 1.47 1.54 1.40 1.27

Note: *** p < .01, ** p < .05, * p < .10; N = 505.

discrimination decreases disadvantaged customers’ benevolence trust

Table 10
(F(1,491) = 24.126, p < .001, B = -0.413). In the context of personalized
Group Means and Standard Deviations of Study 3
price discrimination, customers’ general Internet privacy concerns (B =
Personalized price discrimination tactic, -0.148, p = .001), their product involvement (B = 0.109, p = .028), their
degree of Information Sensitivity
gender (B = -0.263, p = .040), as well as their frequency of online
DV Price-change- Device Geographical Past purchases (B = -0.325, p = .044) also have a significant effect on
direction used, location, browsing
benevolence trust. As we found no significant effect of the data type used
low medium behavior,
high to discriminate prices, we have to reject H4d and H5.
Private and public complaint intentions. Compared to favored cus­
Favored 4.22 4.59 4.06
Price Fairness customer (1.193) (1.278) (1.443)
tomers, customers who are disadvantaged by personalized price
Perceptions Disadvantaged 2.25 2.69 2.51 discrimination show higher private complaint intentions (F(1,491) =
customer (1.339) (1.332) (1.428) 48.671, p < .001, B = 0.839) as well as higher public complaint in­
Favored 3.20 3.75 3.05 tentions (F(1,491) = 39.957, p < .001, B = 0.654). The type of person­
Purchase customer (1.778) (2.146) (1.845) alized pricing tactic has a significant effect on customers’ intention to
Intention Disadvantaged 1.77 2.04 2.00 complain privately (F(2,491) = 3.170, p = .043, η2 = 0.013). Pairwise
customer (1.350) (1.414) (1.486) group comparisons of means (Bonferroni tests) revealed significant
Favored 6.49 6.56 6.34 differences for the comparison of price discrimination based on the
Future Search customer (0.832) (0.816) (1.098) geographical location vs. the past browsing behavior (Mlocation = 4.77 vs.
Intention Disadvantaged 6.71 6.70 6.61
Mbrowsing = 5.14, p = .040). However, as the other contrasts were non-
customer (0.769) (0.653) (0.895)
significant, we can only partly support H4e. No effect of the data type
Favored 2.78 2.81 2.63 was found for public complaint intentions, rejecting H4f. As results
Benevolence customer (1.450) (1.580) (1.465)
Trust Disadvantaged 1.97 2.20 2.25
indicate no interaction between the data type and the price-change-
customer (1.256) (1.085) (1.440) direction, we reject H5. Fig. 3 visualizes the mean values for all
dependent variables by the personalized pricing tactics to compile our
Favored 4.53 4.37 4.73
Private
customer (1.358) (1.500) (1.350) results on H4.
Complaint
Disadvantaged 5.45 5.13 5.61
Intentions
customer (1.410) (1.386) (1.356) Mediation analysis
Public Favored 2.22 2.22 2.42 The ANCOVA analyses demonstrated that the data type that is used
Complaint customer (1.262) (1.415) (1.448) to personalize prices affects consumers’ attitudinal and behavioral
Intentions Disadvantaged 3.21 2.93 3.11 outcomes only to a very limited extent. Moreover, predominantly non-
customer (1.384) (1.415) (1.545)
significant effects of the two-way interaction between the price-
Note: Standard deviations are displayed in parentheses. N = 505. change-direction and the price personalization tactic were unveiled.
Based on these results, there is no reason to assume a moderated
willingness to search for alternative prices or products for customers mediation (i.e., H6). Therefore, we center our further analysis on the
who are disadvantaged by personal price discrimination (F(1,491) = mediating role of price fairness perceptions on consumer reactions
6.625, p = .010, B = 0.228), supporting H3c. Results neither support without including the hypothesized moderating impact of the person­
H4b nor H5. alized pricing tactic.
Benevolence trust. As hypothesized in H3d, personalized price We applied the PROCESS procedure for SPSS (Hayes, 2018; Preacher

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Fig. 3. Mean Values of Dependent Variables by Personalized Pricing Tactic.

effect of personalized price discrimination on purchase intention (indi­

Table 11
rect effect: B = -1.475, LLCI = -1.742, ULCI = -1.225), future search
Direct and Indirect Effects of Personalized Pricing of Study 3
intention (indirect effect: B = 0.161, LLCI = 0.063, ULCI = 0.271),
Direct Indirect Effect p-Value Boot LLCIb ULCIb benevolence trust (indirect effect: B = -1.205, LLCI = -1.444, ULCI =
Effect via Price SEa
-0.983), private complaint intentions (indirect effect: B = 0.960, LLCI =
Fairness
Perceptions 0.770, ULCI = 1.168), and public complaint intentions (indirect effect:
B = 0.594, LLCI = 0.428, ULCI = 0.773). All effects are fully mediated by
Purchase Intention
price fairness perceptions, except for the effect on benevolence trust
0.065 0.647 − 0.212 0.342 (direct effect: B = 0.609, p < .001). For customers disadvantaged by
− 1.475 0.134 − 1.742 − 1.225
personalized price discrimination, we found a significant positive direct
Future Search Intention effect and a significant negative indirect effect on benevolence trust.
0.028 0.758 − 0.149 0.204 However, as there is no reasonable theoretical explanation for a positive
0.161 0.053 0.063 0.271 effect, we suppose that this is either a type I error or simply a technical
Benevolence Trust fit problem in the PROCESS procedure. In addition, the negative effect of
benevolence trust on price discrimination is clearly predominant (total
0.609 0.000 0.387 0.830
− 1.205 0.118 − 1.444 − 0.983 effect: B = -0.579, p < .001). Based on these results we can partly
support H6. While there is no empirical support for a moderating effect
Private Complaint Intentions
of the personalized pricing tactic and its data sensitivity, we find evi­
− 0.120 0.333 − 0.363 0.123 dence that the negative consequences of personalized price discrimi­
0.960 0.101 0.770 1.168
nation are mediated by customers’ price fairness perceptions.
Public Complaint Intentions The results of the hypothesis testing are summarized below (see
0.181 0.199 − 0.096 0.458 Table 12).
0.594 0.088 0.428 0.773

Note: N = 505. 6. Discussion and conclusion

a
Standard errors from the mean result of bootstrapping procedure (resamples
= 10,000). 6.1. Theoretical implications
b
LLCI/ULCI = lower-/upper-level of bias corrected bootstrap 95%-confidence
interval. Price discrimination offers tremendous potential for sellers, but
consumers’ negative reactions might outweigh the monetary benefits.
& Hayes, 2004) to estimate these models (PROCESS model = 4; 10,000 Previous studies indicated that consumers’ acceptance of a price relies
resamples). The same covariates as in the previous ANCOVA analyses on their perception of its fairness (Cox, 2001; Maxwell, 2002; Xia et al.,
were also included in our mediation analyses16. Results of the direct and 2004), and showed that consumers respond with negative attitudinal
indirect effects with price fairness perceptions as mediating variable are and behavioral reactions to a price-setting practice perceived as unfair
summarized in Table 11. (e.g., Haws and Bearden 2006; Maxwell & Garbarino, 2010). However,
Price fairness perceptions emerge as a significant mediator of the existing research largely focused on customers disadvantaged by a
certain price discrimination tactic, and neglected those who are favored
by it. Our research is among the first studies that shed light on the
consequences of price discrimination in e-commerce for both disad­
16
We controlled for perceived data sensitivity, general Internet privacy con­ vantaged and favored customers. Moreover, prior research has not
cerns, product involvement, age, gender, income, frequency of online pur­ incorporated the mediating role of price fairness perceptions. While the
chases, and employment status.

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Table 12
Overview of Hypotheses Test Results of Study 1 and 3
Study H1 Relative to uniform prices, price discrimination leads to…
1 a) lower price fairness perceptions, Partly supported
b) lower purchase intentions, and Partially supported
c) higher intentions to search for alternative offerings Supported
for both favored and disadvantaged customers.
H2 Customers’ negative reactions to price discrimination (i.e., a) lower purchase intentions, b) higher intention to search for a) Supported
alternative offerings) are mediated by price fairness perceptions. b) Not supported
Study H3 Customers disadvantaged by personalized price discrimination show…
3 a) lower price fairness perceptions, Supported
b) lower purchase intentions, Supported
c) lower benevolence trust, Supported
d) higher intentions to search for alternative offerings, Supported
e) higher private complaint intentions, and Supported
f) higher public complaint intentions Supported
than customers favored by personalized price discrimination.
H4 The information sensitivity of the personalized pricing tactic increases customers’ negative reactions (i.e., a) lower fairness Only partial support for H4e
perceptions, b) lower purchase intentions, c) lower trust, d) higher intentions to search for alternative offerings, e) higher
private complaint intentions, and f) higher public complaint intentions) to personalized price discrimination.
H5 The information sensitivity of the data that is used to discriminate prices positively moderates the difference between Partially supported with Purchase
favored and disadvantaged customers and their reactions. Intention as DV
H6 There is moderated mediation such that the negative effect of price discrimination on customer reactions is moderated by Partially supported (only
the information sensitivity of the personalized pricing tactic and mediated by price fairness perceptions. mediation)

study conducted by Malc et al. (2016) found significant correlations Previous studies have been criticized for largely concentrating on
between price fairness perceptions and consumer reactions to price selected behavioral or attitudinal outcome variables (Martin et al.,
discrimination in e-commerce, our study is the first that provides sta­ 2009). Taking a more comprehensive perspective in Study 3, we found
tistical evidence of the causality by analyzing price fairness perceptions that customers disadvantaged by personalized price discrimination react
as mediator in the relationship between price discrimination and con­ with lower purchase intentions, higher future search intentions, lower
sumer response. benevolence trust, and higher private as well as public complaint in­
Results of Study 1 revealed negative attitudinal and behavioral re­ tentions. We could confirm the results of our first study and found evi­
actions for both customer groups. Even favored customers who receive a dence that customers’ responses to personalized pricing are mediated by
lower price compared to uniform prices show lower purchase intentions their price fairness perceptions.
and higher intentions to search for alternative offers or sellers in the Lastly, we investigated several forms of buyer identification with
future. These facts were confirmed by Study 2 in a within-subject design. varying information sensitivity: Considering the device used by a
Yet, as expected, the negative effect on purchase intention and the customer (low information sensitivity), their geographical location
positive effect on future search intention is stronger for disadvantaged (medium information sensitivity), and their past browsing behavior
customers who are charged a price premium. For both customer groups (high information sensitivity) to personalize prices, we may respond to
we found a mediating effect of price fairness perceptions on purchase questions raised by Grewal et al. (2004) and Lii and Sy (2009). Our
intention. Comparing the direct and relative indirect effects of price statistical analyses could not detect significant differences in customers’
discrimination on purchase intention, we noticed that customers’ price reactions based on the information sensitivity of those price discrimi­
fairness perceptions are the central construct that shapes customers’ nation practices. Results indicate that customers dislike price discrimi­
reactions to price discrimination. Thereby, this paper provides well- nation regardless of how a price difference arises. Nonetheless, we found
grounded statistical evidence of the link between price fairness per­ effects of perceived data sensitivity on price fairness perceptions, pur­
ceptions and consumer behavior. However, we could not detect a chase intentions, and private complaint intentions. Another important
mediating effect of price fairness perceptions on the relationship be­ factor that influences customers’ attitudinal and behavioral reactions to
tween price discrimination and customers’ future search intention. personalized price discrimination is their general Internet privacy con­
Future search intentions seem to be directly affected by price discrimi­ cerns, showing significant effects on all outcome variables of interest. In
nation, but not indirectly through fairness perceptions. When searching summary, we conclude that customers have a general aversion to price
for additional products or sellers, consumers must trade off the discrimination, and that the negative reactions are dependent on indi­
perceived benefits (e.g., monetary savings) relative to the costs of search vidual characteristics, such as subjective perceptions of data sensitivity
(e.g., time, effort) (Marmorstein, Grewal, & Fishe, 1992; Grewal et al., and privacy concerns.
1998). Facing a discriminated price is a clear signal that other, cheaper Furthermore, although only partly significant, our results (see Fig. 3)
offers may be available, and thus consumers’ future search intention is indicate the highest acceptance for personalized price discrimination
directly (positively) affected by price discrimination. Moreover, it must based on customers’ geographic location, despite the fact that customers
be noted that the development of the construct future search intention perceive their geographic location as being more sensitive than the de­
ordinates back to the early 80 s (Della Bitta, Monroe, & Mcginnis, 1981), vice they use to make purchases. This finding is in line with the social
when price comparisons were not as easy as today when consumers may norm theory (Maxwell, 1999). Social norms are said to have a strong
simply check Google Shopping or price comparison websites like Pri­ influence on the success of discriminatory pricing systems in general,
ceGrabber.com. and therewith shape the applicability of price discrimination (Maxwell

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and Garbarino, 2010). Consequently, the violation of social norms can 6.3. Limitations and further research
induce the perception of an unfair price and thereby provoke adverse
reactions (Rondan-Cataluña & Martin-Ruiz, 2011). Customers are used Consideration of the implications should be made in the light of
to local price differences, but they rarely or never experienced several limitations, which provide fruitful paths for future research.
discriminated prices based on the devices used or based on their past While scenario-based experiments, such as the ones conducted in this
browsing behavior. In this study, mean values for those two types of study, provide good internal validity, they may lack external validity.
price discrimination are almost identical, indicating that customers For pragmatic reasons, we had to rely on stated behavior, although we
generally refuse innovative price discrimination approaches not aligned share the concern that observational studies may be superior in this
with prevailing standards and norms. context. We suggest that future research should extend our research
questions to more realistic circumstances or test them in the field.
6.2. Managerial implications Furthermore, the experiments described in this paper focused on a single
product offered by a fictitious retailer. Yet, the effects of personalized
Practitioners will have to face negative customer reactions to price prices on consumer behavior may depend on product type or associa­
discrimination that might offset potential monetary benefits. The pre­ tions with the retailer. Future studies might not only investigate these
requisite for customers’ negative attitudinal and behavioral reactions circumstances, but they should also take into account approaches to
are price comparisons that enable them to notice interpersonal differ­ mitigate the negative effects of personalized price discrimination. Pre­
ences. Online, price discrimination can be easily discovered due to social vious studies suggest that consumers’ knowledge of information being
media, price comparison portals, or price search bots (Richards et al., collected has a negative impact on their concerns (Niemann &
2016). Online merchants thus need to be particularly mindful in the Schwaiger, 2016). Hence, managers may have possibilities to increase
application of discriminated prices, as such practices interfere with the price fairness perceptions by notifying the customer which information a
general consensus regarding fair pricing mechanisms and the corre­ firm has collected and how this information will be used (increasing
sponding social norms (Maxwell and Garbarino, 2010). The emergence information transparency) (Dinev & Hart, 2006). Another approach is to
of such norms is proven to vary substantially across different industries, present the price in different formats (e.g. discounts, Weisstein et al.,
which in turn must be recognized when fairness of a pricing discrimi­ 2013) to increase transaction dissimilarity, which in turn mitigates the
nation approach is evaluated. negative effects of dynamic price discrimination on consumers’
As Kuo, Rice, and Fennell (2016) note, increasing familiarity with a perceived fairness, trust, and repurchase intention. Further research
pricing practice favors perceived price fairness. Personalized price could provide additional empirical evidence whether individual dis­
discrimination might be (more) successful in the future, once its appli­ counts should be applied to differentiate or even personalize prices.
cation has gained more acceptance due to its widespread diffusion in Finally, future research could also transfer findings from this paper,
other contexts, similar to the development yield management has un­ which focuses on e-commerce, to brick-and-mortar stores. At present,
dergone (Kimes, 2002). Concerning that practice, it seems favorable that some supermarket chains are already testing personalized coupons
the services of hotels or airlines are less comparable, because they (Venkatesan & Farris, 2012). By offering coupons through loyalty pro­
feature varying characteristics and additional benefits which are asso­ grams or apps, personalized price discrimination that is based on cus­
ciated with the offer. Hence, personalized price discrimination might be tomers’ shopping behavior could be implemented offline (Iyer et al.,
best accompanied by a customization of the product or service, as that 2002). In this context, challenges concerning the multichannel or even
substantially decreases the similarity and thereby might divert attention omnichannel strategy of retailers that act online and offline should be
from price differences (Weisstein, Monroe, & Kukar-Kinney, 2013; Xia further elaborated to avoid cannibalization between sales channels.
et al., 2004).
Knowing that loyalty has a positive effect on fairness perceptions CRediT authorship contribution statement
when price differences are low (Martin et al., 2009), a committed
customer base may serve as a buffer to the negative ramifications of Gerrit Hufnagel: Formal analysis, Data curation, Methodology,
personalized prices (Victor et al., 2019). However, pricing strategists are Project administration, Writing – original draft, Visualization, Concep­
well advised to integrate effects of loyalty, patronage, and search in­ tualization, Investigation. Manfred Schwaiger: Methodology, Investi­
tentions in their simulation models when figuring out the impact of price gation, Formal analysis, Conceptualization, Writing – review & editing,
changes on their revenues. In the event that approaches to improve price Validation, Supervision, Resources. Louisa Weritz: Formal analysis,
fairness perception to a sufficient degree fail, responsible pricing man­ Methodology, Data curation, Project administration, Validation, Writing
agers should contrast different profitability scenarios capturing the – review & editing.
trade-off between the positive effect of (even small) increases in price
and the resulting drop in customer patronage and loyalty. From a
managerial perspective, the gain in revenues might outweigh the Declaration of Competing Interest
negative consequences of the customer behavior induced by personal­
ized pricing. In any case, the results likely depend on company and The authors declare that they have no known competing financial
customer-specific characteristics, so that general statements seem to interests or personal relationships that could have appeared to influence
lack validity at this time. the work reported in this paper.

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Appendix A. Previous empirical research on dynamic and personalized pricing in E-Commerce

(continued on next page)

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(continued )

Appendix B. Stimuli and manipulations of Study 1

Scenario 1

You have decided to buy a new smartphone. In the course of an extensive online research, you When you tell your best friend about your new smartphone, it turns out
have informed yourself and decided to buy the model shown below in online shop you know from that he bought the same smartphone as you on the same day in the same
previous purchases. online shop.

Now imagine that you have bought the offer as shown below. Your friend shows you the invoice indicating that he paid $100, as you
Please take a moment and have a look at the product. paid.

Scenario 2

When you tell your best friend about your new smartphone, it turns out
that he bought the same smartphone as you on the same day in the same
online shop.

Your friend shows you the invoice indicating that he paid $120, whereas
the same smartphone cost you $100.

Scenario 3

When you tell your best friend about your new smartphone, it turns out
that he bought the same smartphone as you on the same day in the same
online shop.

Your friend shows you the invoice indicating that he paid $80, whereas the
same smartphone cost you $100.

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Appendix C. Overview of scales and measures used in Study 1, 2 and 317

Construct/Variable Item/Proxy S1 S2 S3 Precedents/Sources

(Cronbach’s (Cronbach’s (Cronbach’s
Alpha) Alpha) Alpha)

Dependent Variables

7-point semantic scaleThe price I paid was …

(1) extremely unfair/extremely fair
Distributive Price (2) extremely unacceptable/extremely acceptable
Fairness (3) extremely unreasonable/extremely reasonable x x x Martin et al. (2009)
Perception (0.984) (0.908, S1) (0.927)
(0.961, S2)
(0.943, S3)

7-point semantic scaleThe pricing processes and

Procedural Price procedures the online shop uses are …
x
Fairness (1) extremely unfair/extremely fair Martin et al. (2009)
(0,927)
Perception (2) extremely unacceptable/extremely acceptable
(3) extremely unreasonable/extremely reasonable

7-point Likert scale very unlikely/very likelyIf this pricing

situation happened to you, how likely would you be to
(1) buy something from this online shop?
Purchase
(2) shop at this online shop in the future? x x x Garbarino and Maxwell (2010)
Intention
(3) return to this online shop? (0.979) (0.853; S1) (0.976)
(0.962; S2)
(0.949; S3)

7-point Likert scale very unlikely/very likelyBefore making

a purchase decision in the future, I would …
(1) visit other sites to check their prices.
Future Search (2) search for more information about the prices of x x x Grewal et al. (1998), Garbarino
Intention and Maxwell (2010)
alternatives. (0.921) (0.935; S1) (0.920)
(3) visit other retailers for a lower price. (0.895; S2)
(0.931; S3)

7-point Likert scale strongly disagree/strongly agreeThis

online shop …
(1) considers the customer’s welfare when making
important decisions.
x Garbarino and Lee (2003),
Benevolence Trust (2) considers how its future decisions and actions will
affect the customer. (0.956) Garbarino and Maxwell (2010)
(3) has practices that indicate respect for the customer.
(4) has practices that favor the customer’s best interest.
(5) acts as if the customer is always right.

7-point Likert scale very unlikely/very likelyIf this pricing

situation happened to you, how likely is that you would…
(1) forget about the incident?
Private
(2) decide not to use this online shop again? x Singh (1988),Garbarino and
Complaint
(3) speak to your friends and relative about your (0.804) Maxwell (2010)
Intentions
experience?
(4) convince your friends and relatives not to use this
online shop?

7-point Likert scale very unlikely/very likelyIf this pricing

situation happened to you, how likely is that you would…
(1) complain to the seller?
(2) report the experience to a consumer agency?
Public Complaint x Singh (1988),Garbarino and
(3) complain to a consumer agency and ask them to make
Intentions (0.857) Maxwell (2010)
the firm address your concern?
(4) write a letter to the local newspaper about your
experience?
(5) take some legal action against the online shop?

Control Variables

7-point semantic differential scaleTo me buying a new smartphone

is…
Product (1) unimportant / important x x x
Zaichkowsky (1985); adapted
Involvement (2) boring / interesting (0.936) (0.920) (0.934)
(3) irrelevant / relevant
(4) unexciting / exciting

(continued on next page)

17
The Xs shown in Appendix C are intended to indicate in which of the three studies the respective construct was queried with the associated scale. The values in
parentheses below indicate the respective Cronbach’s Alpha values.

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(continued )
Control Variables

(5) unappealing / appealing

(6) mundane / fascinating
(7) worthless / valuable

7-point Likert scale strongly disagree/strongly agree

(1) In general, I am concerned about my privacy when using the
Internet.
Internet (2) I am concerned that information I submit on the Internet could be
misused. x Schumann, von Wangenheim, and Groene
Privacy
(0.951) (2014), Dinev and Hart (2006)
Concern (3) I am concerned that a person can find private information about
me on the Internet.
(4) I am concerned about submitting information on the Internet
because they could be used in a way that I cannot foresee.

7-point semantic differential scaleHow do you perceive the

information the online shop uses to differentiate its prices?
(1) not sensitive at all / very sensitive
Perceived Data x
(2) not personal at all / very personal Xie, Teo, and Wan (2006)
Sensitivity (3) not private at all / very private (0.904)
(4) not individual at all / very individual
(5) not specific at all / very specific

What is your average daily Internet usage in hours?Less than an hour

• 1–2 h
Daily Internet • 2–4 h x x x Doolin et al. (2005), adapted
Usage
• 4–6 h
• More than 6 h

How many times did you purchase products online in the last 12
months?
• Never
Frequency of Online • Once or twice
x x x Doolin et al. (2005), adapted
Purchases • 3–6 times
• Monthly
• Bi-Weekly (only in Study 2)
• Weekly

What amount did you spend online in the last 12 months?

• 0$
• 1–50$
Money Spent for Online • 51–100$
• 101–200$ x x x Doolin et al. (2005), adapted
Purchases
• 201–500$
• 501–1,000$
Over 1,000$

Which social networks do you use on a regular basis (at least once a
week)?
• Facebook
• Instagram
Social Media Usage x x x Malhotra et al. (2004), adapted
• Twitter
• Snapchat
• LinkedIn
• None of these

Manipulation Checks

Single-choice question $80/$100/$120

Manipulation Check Price Direction (1) What is the price you paid for your new smartphone? x x x Martin et al. (2009), adapted
(2) What is the price your friend paid for his smartphone?

Manipulation Check Data Source What was the reason why you and your friend had to pay different prices?
• Our past browsing behavior before we made the purchase.
• The devices we used to make the purchase. x Self-developed
• Our geographical location when we made the purchase.

Realism Check 7-point Likert scale strongly disagree/strongly agree

(1) The scenario presented is easy to understand. x x x Mahadevan (2010), adapted
(2) The scenario presented seems realistic to me, regardless of the prices stated.

Demographics

Demographics Gender, age, education, employment status, and annual gross household income x x x

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Appendix D. Overview of descriptive statistics for demographics and Control variables in Study 1

Variable Absolute frequency Relative frequency (in %)

Gender
Male 147 47.9
Female 160 52.1

Education
Some school but no degree 3 1.0
High school graduate 41 13.4
Some college but no degree 96 31.3
Bachelor’s degree 127 41.4
Master’s degree 31 10.1
Professional degree 5 1.6
Doctorate degree 2 0.7
Other 2 0.7

Employment status
Employed full-time 256 83.4
Employed part-time 5 1.6
Self-employed 14 4.6
Homemaker 1 0.3
Student 2 0.7
Retired 2 0.7
Unemployed 23 7.5
Other 4 1.3

Annual gross household income

Less than $20,000 40 13.0
$20,000 to $34,999 57 18.6
$35,000 to $49,999 52 16.9
$50,000 to $74,999 83 27.0
$75,000 to $99,999 36 11.7
$100,000 or more 39 12.7

Frequency of products purchased online in the last 12 months

Once or twice 9 2.9
3–6 times 72 23.5
Monthly 140 45.6
At least weekly 86 28.0

Amount spent on online purchases in the last 12 months

$1–50 6 2.0
$51–100 31 10.1
$101–200 38 12.4
$201–500 84 27.4
$501–1000 67 21.8
Over $1000 81 26.4

Average daily Internet usage

Less than an hour 1 0.3
1–2 h 32 10.4
2–4 h 63 20.5
4–6 h 70 22.8
More than 6 h 141 45.9

Social Media Usage (at least weekly)

Facebook User 244 79.5
Instagram User 133 43.3
Twitter 144 46.9
Snapchat 34 11.1
LinkedIn 54 17.6
No Social Media 21 6.8

Appendix E:. ANOVA results of the realism check of Study 1

Experimental Group Scenario The scenario was…

realistic regardless of the prices stated. easy to understand.

1 Same price M = 6.41 M = 6.64

SD = 0.84 SD = 0.57
2 Favored customers M = 6.39 M = 6.72
SD = 0.93 SD = 0.58
3 Disadvantaged customers M = 6.20 M = 6.55
SD = 0.90 SD = 0.68
p = .18 p = .14

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Note: N = 307.
Appendix F. Stimuli and manipulations of Study 2

Scenario 1:
The selected online shop offers you the smartphone for $100. The website, among others, lets you know that all products
are offered with a “best price guarantee”. Now imagine that you have bought the smartphone. Please take a moment and
have a look at the product.

In order to review the pricing strategy, you ask your best friend to request the same product from the same website
immediately. It turns out that your friend would have to pay the same price as you, namely $100 for the smartphone.

Scenario 2:
The selected online shop offers you the smartphone for $120. The website, among others, lets you know
that personalized prices are offered based on individual (non-transparent) criteria. Now imagine that you have bought
the smartphone. Please take a moment and have a look at the product.

In order to review the pricing strategy, you ask your best friend to request the same product from the same website
immediately. It turns out that your friend would have to pay a lower price than you, namely $100 for the smartphone.

Scenario 3:
The selected online shop offers you the smartphone for $80. The website, among others, lets you know that personalized
prices are offered based on individual (non-transparent) criteria. Now imagine that you have bought the smartphone.
Please take a moment and have a look at the product.

In order to review the pricing strategy, you ask your best friend to request the same product from the same website
immediately. It turns out that your friend would have to pay a higher price than you, namely $100 for the smartphone.

Appendix G. Stimuli and manipulations of Study 3

You have decided to buy a new smartphone. In the course of an extensive online research, Scenario 1: Favored customer, based on device used
you have informed yourself and decided to buy the model shown below in an online shop
you know from previous purchases. When you tell your best friend about your new smartphone, it turns out that he
bought the same smartphone as you on the same day in the same online shop.
Now imagine that you have bought the offer as shown below.
Please take a moment and have a look at the product. Your friend shows you the invoice indicating that he paid $120, whereas the same
smartphone cost you $100.

Upon consultation with the online shop’s customer service department, you will
be informed that the online shop differentiates its prices according to the device

(continued on next page)

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(continued )
customers use to make a purchase.

Scenario 2: Disadvantaged customer, based on device used

When you tell your best friend about your new smartphone, it turns out that he
bought the same smartphone as you on the same day in the same online shop.

Your friend shows you the invoice indicating that he paid $80, whereas the same
smartphone cost you $100.

Upon consultation with the online shop’s customer service department, you will
be informed that the online shop differentiates its prices according to the device
customers use to make a purchase.

Scenario 3: Favored customer, based on geographical location Scenario 5: Favored customer, based on past browsing behavior

When you tell your best friend about your new smartphone, it turns out that he bought the When you tell your best friend about your new smartphone, it turns out that he
same smartphone as you on the same day in the same online shop. bought the same smartphone as you on the same day in the same online shop.

Your friend shows you the invoice indicating that he paid $120, whereas the same Your friend shows you the invoice indicating that he paid $120, whereas the same
smartphone cost you $100. smartphone cost you $100.

Upon consultation with the online shop’s customer service department, you will be Upon consultation with the online shop’s customer service department, you will
be informed that the online shop differentiates its prices according to the
informed that the online shop differentiates its prices according to the customer’s
customer’s past browsing behavior.
geographical location when making a purchase.
Scenario 6: Disadvantaged customer, based on past browsing behavior
Scenario 4: Disadvantaged customer, based on geographical location
When you tell your best friend about your new smartphone, it turns out that he
When you tell your best friend about your new smartphone, it turns out that he bought the bought the same smartphone as you on the same day in the same online shop.
same smartphone as you on the same day in the same online shop.
Your friend shows you the invoice indicating that he paid $80, whereas the same
Your friend shows you the invoice indicating that he paid $80, whereas the same smartphone cost you $100.
smartphone cost you $100.
Upon consultation with the online shop’s customer service department, you will
Upon consultation with the online shop’s customer service department, you will be be informed that the online shop differentiates its prices according to the
informed that the online shop differentiates its prices according to the customer’s customer’s past browsing behavior.
geographical location when making a purchase.

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Gerrit Hufnagel is a former research and teaching assistant at the Institute of Market-Based
Mende, M., Scott, M. L., & Bolton, L. E. (2018). All That Glitters Is Not Gold. Journal of
Management at the Munich School of Management within Ludwig-Maximilians-University
Service Research, 21(4), 405–420.
in Munich. He earned his Ph.D. from Ludwig-Maximilians-University in 2020. His research
Mikians, J., Gyarmati, L., Erramilli, V., & Laoutaris, N. (2013). Crowd-Assisted Search for
is focused on personalized price discrimination and customer-centric growth. Gerrit
Price Discrimination in E-Commerce. In K. Almeroth (Ed.), CoNext 2013 - Conference
Hufnagel presented his work at renowned international conferences such as the Australian
on Emerging Networking Experiments and Technologies (pp. 1–6). New York, NY: ACM.
& New Zealand Academy of Management (ANZAM) Conference, the Global Marketing
Milne, G. R., Pettinico, G., Hajjat, F. M., & Markos, E. (2017). Information Sensitivity
Conference (GMC), or the Association for Marketing & Health Care Research Conference
Typology: Mapping the Degree and Type of Risk Consumers Perceive in Personal
(AMHCR), where he was awarded with the best student paper award.
Data Sharing. Journal of Consumer Affairs, 51(1), 133–161.
Niemann, A., & Schwaiger, M. (2016). In Consumers’ Expectations of Fair Data Collection
and Usage - A Mixed Method Analysis (pp. 3646–3655). Piscataway, NJ: IEEE. Manfred Schwaiger is full professor of business administration, head of the Institute of
Obermiller, C., Arnesen, D., & Cohen, M. (2012). Customized Pricing: Win-Win or End Market-Based Management, and Dean of Studies at the Munich School of Management
Run? Drake Management Review, 2(1), 12–28. within Ludwig-Maximilians-University in Munich, for which he has been serving as a dean
Ouellette, J. A., & Wood, W. (1998). Habit and Intention in Everyday Life: The Multiple from 2003-2005. He earned his Ph.D. (1993) and his post-doctoral degree (“Habilitation”,
Processes by Which Past Behavior Predicts Future Behavior. Psychological Bulletin, 1998) from Augsburg University. His main research interests cover the management of
124(1), 54–74. intangible assets (esp. reputation and trust), return on marketing, consumer behavior,
Phelps, J., Nowak, G., & Ferrell, E. (2000). Privacy Concerns and Consumer Willingness corporate communications, and market & trend research. His academic work has been
to Provide Personal Information. Journal of Public Policy & Marketing, 19(1), 27–41. published in leading journals in the field (e.g. Strategic Management Journal, Journal of
Preacher, K. J., & Hayes, A. F. (2004). SPSS and SAS Procedures for Estimating Indirect the Academy of Marketing Science), and has been awarded with a number of best paper
Effects in Simple Mediation Models. Behavior Research Methods, Instruments, & awards. Manfred Schwaiger has been a member of the Board of Directors of the German
Computers, 36(4), 717–731. Academic Association for Business Research (VHB), and he still serves as a member of the
Priester, A., Robbert, T., & Roth, S. (2020). A special price just for you: Effects of International Advisory Board of EMLyon, Grande École. Moreover, he is editorial review
personalized dynamic pricing on consumer fairness perceptions. Journal of Revenue board member of the Journal for Public Policy and Marketing, the Journal of Advertising,
and Pricing Management, 1–14. and the International Journal of Advertising.
Richards, T. J., Liaukonyte, J., & Streletskaya, N. A. (2016). Personalized Pricing and
Price Fairness. International Journal of Industrial Organization, 44, 138–153.
Louisa Weritz is research and teaching assistant as well as doctoral candidate at the
Rondan-Cataluña, F. J., & Martin-Ruiz, D. (2011). Moderating Effects in Consumers’
Institute of Market-Based Management at the Munich School of Management within
Perceptions of Price Unfairness. Journal of Consumer Behaviour, 10(5), 245–254.
Ludwig-Maximilians-University in Munich. She received a Bachelor of Science and Master
Rosencrance, L. (2000). September 11). Customers Balk at Variable DVD Pricing: Amazon.
of Science in Marketing and Management from Ludwig-Maximilians-University Munich.
com Claims It was Part of a Test. Retrieved from https://www.computerworld.com/
Her research is focused on pricing strategies in e-commerce and customer trust.
article/2597065/retail-it/customers-balk-at–-variable-dvd-pricing.html.

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