Consumer perceptions of price (un)fairness
Bolton and colleagues report a series of studies on when consumers judge a price to be unfair. The consistent finding is that consumers are inclined to believe the selling price of a good or service is substantially higher than what they take its fair price to be. People proved sensitive to several reference points, including past prices, competitor prices and the cost of goods sold, but they used those reference points badly. They underestimated the effects of inflation, over-attributed price differences to profit, and failed to take into account the full range of costs a vendor carries. The authors then tested corrective interventions, among them providing historical price information, explaining why prices differ, and cueing the costs behind a price. These were only modestly effective. The results are set in the context of a four-dimensional transaction space, which the authors use to show where perceived unfairness comes from, both for an individual transaction and across multiple ones.
Bolton and colleagues report a series of studies on when consumers judge a price to be unfair. The consistent finding is that consumers are inclined to believe the selling price of a good or service is substantially higher than what they take its fair price to be. People proved sensitive to several reference points, including past prices, competitor prices and the cost of goods sold, but they used those reference points badly. They underestimated the effects of inflation, over-attributed price differences to profit, and failed to take into account the full range of costs a vendor carries. The authors then tested corrective interventions, among them providing historical price information, explaining why prices differ, and cueing the costs behind a price. These were only modestly effective. The results are set in the context of a four-dimensional transaction space, which the authors use to show where perceived unfairness comes from, both for an individual transaction and across multiple ones.
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Consumers are inclined to believe the selling price of a good is substantially higher than its fair price; they are sensitive to past prices, competitor prices and cost of goods sold, but underestimate the effects of inflation, overattribute price differences to profit, and fail to account for the full range of vendor costs. Corrective interventions including historical price information, explaining price differences and cueing costs were only modestly effective. Verified at the published record 2026-10-01. doi:10.1086/346244
Where we use it
- The Price Rise Everyone Saw, Why We Act
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The source
No link available. The citation as the article records it:
Bolton, L. E., Warlop, L., & Alba, J. W. (2003). 'Consumer perceptions of price (un)fairness.' Journal of Consumer Research, 29(4), 474-491. Consumers are inclined to believe the selling price of a good is substantially higher than its fair price; they are sensitive to past prices, competitor prices and cost of goods sold, but underestimate the effects of inflation, overattribute price differences to profit, and fail to account for the full range of vendor costs. Corrective interventions including historical price information, explaining price differences and cueing costs were only modestly effective. Verified at the published record 2026-10-01. doi:10.1086/346244