Privacy concerns and justice perceptions with the disclosure of biometric versus behavioral data for personalized pricing tell me who you are, I’ll tell you how much you pay. Consumers’ fairness and privacy perceptions with personalized pricing

Abstract

This research investigates whether consumers express different levels of store patronage intention and expected amount of discount depending on the type of data they have to disclose to obtain a personalized price. Findings from two experiments—manipulating the type of data along with the type of incentive (Study 1) and the level of effort (Study 2)—reveal that behavioral (vs. biometric) data make customers perceive the outcome of the price personalization more equitable, thus lowering the privacy concern, and enhancing their sense of entitlement to receiving a benefit from the retailer. The impact of the type of data on perceptions of distributive justice changes as a function of the type of incentive provided to customers (Study 1) and the level of effort required to see the personalized price (Study 2). The collection of biometric data should be counterbalanced by a higher amount of personalized discount to lower consumers’ privacy concerns.