Reactions to a Price Increase: What Makes it Seem Fair

Abstract

Purpose - This study intends to investigate if the Basic Fairness Model (Rutte and Messick 1995) is supported across cultures in Brazil, Germany and the United States. Design/methodology/approach - To test the model across cultures, structured focus groups were conducted in Germany, Brazil and the United States. Findings - The Focus groups generally supported the basic fairness model, although with a few modifications and additions. Culture affects understandings of appropriate behavior. Research limitations/implications - To a great extent, the difference in the Focus group participants' responses reflected the realities of their different environments. There are also no doubt differences in how different businesses operate. Such differences can lead to perceptual differences. Practical implications - Power affects the impact of different industries on price fairness judgments. When an industry is more powerful, as in the case of healthcare insurance, consumers are sensitized to fairness concerns. They are, however, reluctant to react because the alternatives are not good. The result may be capitulation: purchasing the product despite being angry. The result however, may also be explosive anger. Originality/value - Despite the limitations of the research instruments, the Focus groups did provide clear support for the basic fairness model. How people react to unfairness appears to be universal.