The mitigating role of nostalgia for consumer price unfairness perceptions in response to disadvantageous personalized pricing

In the wake of the ability to analyze big customer data, personalized pricing is an interesting way for firms to increase profits. However, consumers often perceive these pricing practices as unfair, especially upon learning that they have paid more than other consumers. Thus, managers can either avoid personalized pricing altogether or attempt to mitigate such consumer perceptions. The present research proposes and finds that consumer nostalgia plays a mitigating role that firms might utilize when engaging in personalized pricing. Two lab experiments and one online experiment examine situations in which consumers become aware of disadvantageous personalized pricing for themselves when compared to other lower paying customers. The results provide evidence that the negative effect of disadvantageous personalized pricing (vs. equal pricing) on price fairness perceptions is counteracted by high consumers' nostalgia proneness via their perceptions of loneliness.