Suspicion and Perceptions of Price Fairness in Times of Crisis
- 425 Downloads
Times of crisis bring about increased demands on businesses as shortages, or unexpected but significant, business costs are encountered. Passing on such costs to consumers is a challenge. When faced with a retail price increase, consumers may rely on cues as to the motive behind the increase. Such cues can raise suspicion of alternative motive (e.g., taking advantage of the consumer) affecting consumers’ judgments of price fairness. This research investigates two triggers of suspicion: salience of alternative motives, and behavior judged to be out-of-character for the business. Results of the two studies within crisis contexts indicate that suspicion is created when alternative motives are salient and when a retailer acts out-of-character. Multiple group analyses revealed that suspicion induced negative affect and subsequent perceptions of price fairness. When suspicion was present, more negative feelings toward the retailer and judgments of price unfairness resulted.
Keywordssuspicion price fairness price gouging crisis affect
Unable to display preview. Download preview PDF.
- Badertscher, N.: 2005, ‘15 Cited for Gouging Gas Prices’, The Atlanta Journal-Constitution (November 16), Home Edition, 1B.Google Scholar
- Federal Trade Commission: 2006, ‘Investigation of Gasoline Price Manipulation and Post-Katrina Gasoline Price Increases (Report, Spring 2006)’, http://www.ftc.gov/reports/060518PublicGasolinePricesInvestigationReportFinal.pdf. Accessed 5 Jan 2010.
- Fialka, John J.: 2005, ‘Lawmakers Struggle to Define Gasoline Price “Gouging”‘, The Wall Street Journal (November 9), p. B1.Google Scholar
- Florida Statute 501.160: 2009, Renal or Sale of Essential Commodities During a State of Emergency; Prohibition Against Unconscionable Prices.Google Scholar
- Hao, S. and D. Nakaso: 2008, ‘Last Dairy Closing on Oahu; Milk a Concern’, USA Today (January 30, 2008), News, p. 3A.Google Scholar
- Kahneman, D., J. L. Knetsch and R. Thaler:1986, ‘Fairness as a Constraint on Profit Seeking: Entitlements in the Market’, The American Economic Review 76, 728-741.Google Scholar
- Levine, T. R. and S. A. McCornack:1991, ‘The Dark Side of Trust: Conceptualizing and Measuring Types of Communicative Suspicion’, Communication Quarterly 39, 325-340.Google Scholar
- Maxwell, S.:1995, ‘What Makes a Price Increase Seem Fair?’ Pricing Strategy and Practice 3, 21-27.Google Scholar
- State of South Carolina Office of the Attorney General: 2009, ‘Gas Price Gouging Report (Report, June 25, 2009)’, http://www.scattorneygeneral.com/newsroom/pdf/2009/gaspricegouging.pdf. Accessed 5 Jan 2010.
- Welborn, A. A. and A. M. Flynn: 2005, ‘Price Increases in the Aftermath of Hurricane Katrina: Authority to Limit Price Gouging’, CRS Report for Congress, # RS22236 (September 2), http://www.fas.org/sgp/crs/misc/RS22236.pdf. Accessed 21 Sept 2006.