Lisa Bolton

Who they are

Bolton works on pricing, fairness and consumer knowledge, with Luk Warlop and Joseph Alba on the paper this site relies on.

The baseline the studies establish is uncomfortable for both sides of a transaction. Consumers are not ignorant of price information: they are sensitive to past prices, competitor prices and cost of goods sold. But they underestimate the effects of inflation, overattribute price differences to profit, and fail to take the full range of a vendor's costs into account.

Then the part worth knowing if you have ever written a letter explaining a price rise. The corrective interventions they tested, historical price information, explanations of why prices differ, cueing the costs involved, were only modestly effective.

Key papers

Bolton, L. E., Warlop, L., & Alba, J. W. (2003). "Consumer perceptions of price (un)fairness." Journal of Consumer Research, 29(4), 474-491. First author.

Key ideas

The fairness judgement is systematically biased in one direction, which means a strong feeling that a price is unfair is weak evidence that it is. See Price Fairness.

Explaining costs barely helps, so the standard corporate response to a pricing complaint is aimed at the dimension that does not move.

Information is not inert, which is a distinction this site got wrong in a draft and corrected: modestly effective is not ineffective, and people were sensitive to price reference points.

Age is a real limit here. This was established before prices were routinely discussed in public, and before the screenshot.

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