Consumer response to norm-breaking pricing events in e-commerce

e-commerce allows for many innovations in pricing: some have been embraced by consumers, others rejected. Using an online experiment, we explore the role of norms in predicting consumer responses to differential pricing arrived at either by violating an established pricing norm (dynamic posted pricing; setting prices based on individual consumer demand) or not (two retailers pricing differently). Our findings support the critical role of norms, such that belief in the norm is a strong predictor of negative responses (i.e., fairness, trust, purchase, search and complaint intentions) and priming people to consider norms generally increases the negative response. We also find that prior trust in the firm acts as a partial buffer against the negative response to norm breaking but at a diminishing rate as prior trust increases.