All's not fair in pricing: An initial look at the dual entitlement principle Article

Urbany, JE, Madden, TJ, Dickson, PR. (1989). All's not fair in pricing: An initial look at the dual entitlement principle . MARKETING LETTERS, 1(1), 17-25. 10.1007/BF00436145

cited authors

  • Urbany, JE; Madden, TJ; Dickson, PR

authors

abstract

  • A new theory in economics (Kahneman, Knetsch, and Thaler, 1986a, b) contends that consumer judgments of seller fairness can explain why sellers in many industries do not raise prices to ration off excess demand. In a small study focusing on automated teller machines (ATM) fees, we obtain empirical support for KKT's prediction that unjustified price increases are perceived as unfair, while cost justification "legitimates" a price increase in consumers' eyes. We also find, however, that fairness perceptions are not significantly related to behavioral intentions (as the theory would suggest). Many respondents felt the fee was unfair but would not switch banks because of switching costs, while others felt the fee was fair but would switch banks because of the cumulative cost. Research directions are discussed. © 1989 Kluwer Academic Publishers.

publication date

  • December 1, 1989

published in

Digital Object Identifier (DOI)

start page

  • 17

end page

  • 25

volume

  • 1

issue

  • 1