Consumer vulnerability to dynamic pricing in online environments

Corina Paraschiv, Nawel Ayadi, Xavier Rousset and Monica Turinici

Applied Economics, 2024, vol. 56, issue 25, 3032-3047

Abstract: This article examines consumer vulnerability perceptions of dynamic pricing in online environments. Based on an online survey of 763 French web-users, we show that dynamic pricing generates a feeling of being vulnerable and a perceived loss of control over the transaction process. A bivariate probit analysis of these two dimensions of consumer vulnerability is performed, allowing to highlight their connection, but also their different nature. While consumer feeling of being vulnerable is triggered by unethicality and unfairness perceptions, loss of control relies on the perception of dynamic prices as illegal, unacceptable, and unpredictable. Consumer displeasure is identified as the only factor with an overall effect on consumer vulnerability. Our findings suggest that firms opting for dynamic pricing should adopt a careful and cautious approach given the potential of this pricing strategy to generate consumer vulnerability. Regulation appears as a promising tool to fight against consumer perception of loss of control, but not their feeling of being vulnerable.

Date: 2024
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DOI: 10.1080/00036846.2023.2203898

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