How and How Much To Reveal? The Effects of Price Transparency On Consumers' Price Perceptions

Abstract

This study investigated the effects of price transparency on consumers' price perceptions. Our two-dimensional information transparency framework (sufficiency and diagnosticity of pricing information) is grounded in the Heuristic-Systematic Model of Persuasion. Real-life online hotel booking sites were used for hypothesis testing. Our results show that consumers' price fairness perceptions and willingness-to-pay are more susceptible to the influence of externally supplied pricing information when such information is presented in a high transparency context (i.e., information high in sufficiency and diagnosticity). Heightened judgmental confidence in consumers' price perceptions was also observed in the high information transparency condition. Managerial implications of these findings are briefly discussed.