How consumers compare prices

Consumers compare prices on the basis of how powerful they feel, according a new study.

Authors Liyin Jin, Yanqun He (both Fudan University), and Ying Zhang (University of Texas, Austin) said that the degree to which one feels powerful influences which type of price comparison threatens their sense of self-importance and, in turn, affects the perception of price unfairness.

Variations in price are common in today's market, the authors explain, but companies risk consumers' wrath when those customers perceive unfairness.

According to the authors, consumers have two main ways of evaluating the fairness of a price: they compare with what they've paid for the same item in the past (self-comparison) or they ask how the price compares with what other customers are paying (other-comparison).

The authors looked at the ways consumers' self-perceptions affected their reactions to the two kinds of comparisons.

In one study, the authors found that participants who felt powerful experienced more unfairness when it appeared that they were paying more than others.

But people who did not feel powerful experienced more unfairness when they used self-comparisons. The study also revealed that "high-power" participants were more likely to get angry about unfairness and indicated they were more likely to complain about the perceived unfairness.

The new study has been published in the Journal of Consumer Research.