Consumers’ fairness and privacy perceptions with personalized pricing

This research focuses on retailers’ price personalization strategies and investigates if consumers display different levels of store patronage intention and expected amount of discount depending on the type of data they are asked to disclose to obtain a personalized price. Findings from two experimental studies manipulating the type of data and the levels of distributive justice (Study 1) and the level of effort (Study 2) reveal that consumers react more favorably when the retailer requests the customer to share behavioral rather than biometric data. The fairer the perceived outcome of the price personalization, the less customers will be concerned with their privacy, and the more entitled they will feel about receiving a benefit from the retailer. The impact of type of data on fairness changes as a function of the benefit provided to customers (Study 1) and the level of effort to display the personalized price (Study 2).