Dynamic Pricing on the Internet: a Price Framing Approach

Fei Lee, University of Illinois, Urbana-Champaign
Kent B. Monroe, University of Illinois, Urbana-Champaign
The applicability of online dynamic pricing practices is still debatable given that contradictory findings have been reported in both modeling and behavioral literatures. Using two experiments, our research shows that different price framing tactics (dollar off, percentage off, cash coupon, and free gift) can reduce consumers’ negative perceptions toward dynamic pricing even when they are aware of paying a higher price than others for the same product at the same online store. The differences in consumers’ perceived transaction dissimilarity also can reduce consumers’ perceived price unfairness and increase perceived trust and purchase intentions.
[ to cite ]:
Fei Lee and Kent B. Monroe (2008) ,"Dynamic Pricing on the Internet: a Price Framing Approach", in NA - Advances in Consumer Research Volume 35, eds. Angela Y. Lee and Dilip Soman, Duluth, MN : Association for Consumer Research, Pages: 637-638.