Consumer responses to price discrimination: Discriminating bases, inequality status, and information disclosure timing influences

Abstract

This study broadly explores consumers' perceived unfairness, negative emotions, internal reference price, and store choice under five common methods of price discrimination using two experimental studies. Study 1 investigates the interaction between discriminating bases and inequality status. Results reveal that discriminating bases only influence perceived unfairness for advantaged consumers, but affect all four responses for disadvantaged consumers. For disadvantaged consumers, direct discrimination that complies with social norms evokes the weakest unfavorable responses, whereas direct discrimination against social norms triggers the highest perception of unfairness and negative emotions but has similar effects on internal reference price and store choice to indirect discrimination. Study 2 examines the effect of information disclosure timing by comparing pre- and post-purchase disclosure policies. Results show that post-purchase disclosure of discrimination information elicits higher negative emotions for indirect discrimination involving coupon and purchase quantity, but is rather inconsequential for direct discrimination or indirect discrimination through membership.