We use attribution theory to understand consumers' perceptions of fairness of price increases. Using the dual entitlement (DE) principle, researchers in the past have suggested that price increases will be perceived as fairer if they are cost-justified. In this study, we empirically demonstrate that this is not universally true. We conduct three experiments to examine the fairness perception on two attributional dimensions - locus of cause and controllability. We find empirical evidence to conclude that even cost-justified price increases can be perceived as less fair when the locus of causality is internal to the seller and/or when the price increase is within the volitional control of the seller. For example, when competitors' prices stay the same or when the cost increase is directly attributable to the seller's actions, even cost-justified price increases are seen as less fair. Implications of these findings for managers and policymakers are discussed.
|Original language||English (US)|
|Number of pages||11|
|Journal||Journal of Business Research|
|State||Published - Jun 1 2003|
- Attribution theory
- Dual entitlement principle
- Price fairness