Journal of Information Technology Services (한국IT서비스학회지)

Korea Society of IT Services (한국IT서비스학회)
권호 표지

An Experimental Study on the Price Discrimination on the Internet: The Effect of Illusion of Control and Lateral Customer Relationship on Price Fairness

인터넷의 다이나믹 프라이싱 구매방식에서의 가격차별화에 대한 구매자의 가격공정성 인지에 관한 연구

  • Published : 2007.08.31
Download PDF
⟨ Previous Next ⟩

Abstract

The current advance of IT and the e-commerce triggers the wide practice of dynamic pricing in all industries although the price discrimination has been very cautiously applied in the limited areas in the past. The price discrimination which offers different prices for each customer depending on their preference and buying behaviors has recently gained attention as it could provide superior benefits to sellers. The wide adoption of price discrimination, on the other hand, is reported to face buyer resistances and complaints. Our limited understanding on the perception of price fairness, which we think is key concept in the price discrimination on the Internet-enabled transactions, motives us to investigate factors that affect the perception of price fairness. This study focuses on illusion of control and lateral customer relationship to investigate their effects on price fairness in online auction and group purchase context. By conducting laboratory experiments, our study demonstrates that customers' perception on illusion of control in price determination and advantageous lateral customer relationship significantly affect price fairness perception in both online auction and group purchase environment. The findings are expected to provide researchers and managers with useful insights to develop better pricing strategies and design effective dynamic pricing mechanisms.

Keywords

References

  1. Alloy, L. and C. M. Clements, "Illusion of control : Invulnerability to negative affect and depressive symptoms after laboratory and natural stressors", Journal of Abnormal Psychology, Vol.101(1992), pp. 234-245 https://doi.org/10.1037/0021-843X.101.2.234
  2. Baker, W., M. Marn and C. Zawada, "Price Smarter on the Net", Harvard Business Review, Vol.79, No.2(2001), pp.122- 127
  3. Bolton, Lisa E., L. Warlop, and O. W. Alba, "Consumer Perception of Price (Un) Fairness", Journal of Consumer Research, Vol.29(2003), March, pp.474-491 https://doi.org/10.1086/346244
  4. Campbell, Margaret C., "Perceptions of price unfairness: Antecedents and consequences', Journal of Marketing Research, Vol.36(1999a), pp.187-199 https://doi.org/10.2307/3152092
  5. Campbell, Margaret C., "Why did you do that?" The important role of inferred motive in perceptions of price fairness", Journal of product & brand management, Vol.8 No.2(1999b), pp.145-152 https://doi.org/10.1108/10610429910266995
  6. Chavez, A. and P. M. Kasbah, "An Agent Marketplace for Buying and Selling Goods", In proceeding of the First International Conference on the Practical Application of Intelligent Agents and Multi-agent Technology, London, U.K., 1996
  7. Cox, Jennifer Lyn, "Can differential prices be fair?", Journal of Product & Brand Management, Vol.10, No.5(2001), pp.264-275 https://doi.org/10.1108/10610420110401829
  8. Elmaghraby, W. and P. Keskinocak, "Dynamic pricing in the presence of Inventory considerations : Research Overview, current practices and future direction", Management Science, Vol.49, No.10(2003), pp.1287- 1309 https://doi.org/10.1287/mnsc.49.10.1287.17315
  9. Goldberg, D, D. Nichols, B. M. Oki and D. Terry, "Using collaborative filtering to weave an information tapestry", Communications of the ACM, Vol.35, No.12(1992), pp.61-70
  10. Kahneman, D., J. L. Knetsch, and R. H. Thaler, "Fairness as a constraint on profit seeking : entitlements in the market", American Economic Review, Vol.76(1986), pp.728-741
  11. Kamen, J. M. and R. J. Toman, "Psychophysics of prices", Journal of Marketing Research, Vol.7(1970), pp.27-35 https://doi.org/10.2307/3149503
  12. Kautz, H., B. Selman and M. Shah, "Referral web : Combining social networks and collaborative filtering-An interactive system for restructuring, visualizing, and searching social networks on the web", Communications of the ACM, Vol.40, No.3 (1997), pp.63-65
  13. Kephart, J. and J. Hanson, "Dynamic Pricing by Software Agents", Computer Network, Vol.32, No.6(2000), pp.731-752 https://doi.org/10.1016/S1389-1286(00)00026-8
  14. Langer, E., "The illusion of control", Journal of Personality and Social Psychology, Vol. 32(1975), pp.311-328 https://doi.org/10.1037/0022-3514.32.2.311
  15. Martin, Marielza and K. B. Monroe, "Perceived price fairness : a new look at an old construct", in Allen, C. and John, D. R. (Eds), Advances in Consumer Research, Vol.21 (1994), Association for Consumer Research, Provo, UT, pp.75-78
  16. Mathwick, C. and E. Rigdon, "Play, Flow and the Online Search Experience", Journal of Consumer Research, Vol.31, No.2(2004), pp.324-332 https://doi.org/10.1086/422111
  17. Maxwell, Sarah, "Rule-based price fairness and its effect on willingness to purchase", Journal of Economic Psychology, Vol.23 (2002), pp.191-212 https://doi.org/10.1016/S0167-4870(02)00063-6
  18. Pigou, A., "The Economic of welfare", Macmillan Publishing, 1920
  19. Proshansky, H. M., W. H. Ittelson and L. G. Rivlin, "Freedom of Choice and Behavior in Physical Setting", in Environmental Psychology, Harold M. Proshansky, et al. eds. New York : Holt, Rinehart and Winston, (1974), pp.170-181
  20. Thompson, S., "Illusion of control : How we overestimate our personal influence", Current directions in Psychological science, Vol.8, No.6(1999), pp.187-190 https://doi.org/10.1111/1467-8721.00044
  21. Vaidyanathan, R. and P. Aggarwal,, "Who is the fairest of them all? An attributional approach to price fairness perceptions", Journal of Business Research, Vol.56(2003), pp.453-463 https://doi.org/10.1016/S0148-2963(01)00231-4
  22. Weiner, B., "Cognitive (attribution)-emotion- action model of motivated behavior: an analysis of judgments of help-giving", Journal of Personality and Social Psychology, Vol.39(1980), pp.186-200 https://doi.org/10.1037/0022-3514.39.2.186
  23. Whiston, A. B., D. O. Stahl, and S. Choi, "The Economics of Electronic Commerce, Macmillan Technical Publishing, Indiana. 1997