Don't Show the Price Too Early: How (and When) Uncertainty Improves Perceived Price Fairness

Consumers often see a hidden price and need to engage in an action to reveal it (e.g., "Click here to see the price," "See the price in cart," etc.). Will consumers perceive the same price differently if it is first hidden and then revealed than if it is presented directly? We propose that first hiding a price and then revealing it (vs. directly showing a price) can create uncertainty about the price (i.e., price uncertainty), which in turn, can increase perceived price fairness and purchase likelihood. Our proposition is based on three streams of literature. First, consumers are aversive to information gaps (i.e., not knowing) and are motivated to reduce an information gap by searching or mentally constructing the missing information (e.g., guessing what the missing information might be; Loewenstein 1994). Hence, we argue that when the price is hidden, consumers tend to predict what the price will be. Second, prior research suggests that when facing possible negative outcomes, people often "brace for the worst" to reduce potential disappointment when the outcome is realized (Sweeny and Cavanaugh 2012). Since price is usually associated with psychological losses and pain (Rick, Cryder, and Loewenstein 2008; Thaler 1985) and thus often seen as a negative outcome, we further argue that consumers confronting a hidden price tend to cope with price uncertainty by expecting a higher/worse price. Finally, the literature on price fairness suggests that consumers evaluate the fairness of an offered price by comparing it against their expected price (Kalyanaram and Winer 1995; Monroe 1990), and a smaller difference (i.e., offered price minus expected price) results in a higher level of perceived price fairness (Winer 1988). Consequently, a higher expected price, resulting from price uncertainty, will make the offered price look fairer. Hypothesis 1: Price uncertainty (vs. certainty) will increase perceived fairness of the offered price. Hypothesis 2: An increase in the expected price drives the positive effect ofprice uncertainty on perceived price fairness. Furthermore, price is often, but not always, interpreted as a negative outcome. For example, if the context suggests that a price is being hidden because it is too good to be openly disclosed, as in sales events, then consumers may brace for the best and lower their expected price. As a result, in these situations, price uncertainty will reduce the expected price, enlarge the difference between the offered price