Is All that Unequal Unfair? On the Perceived Fairness of Price and Wage Disparities PDF Download

Author: Nofar Duani
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Languages : en
Pages : 0

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Book Description
In a prominent Forbes magazine piece, Anderson (2019) asks whether ethics really matter to today's consumers. The answer to this question appears to be a resounding yes. “Unlike any other time in history, consumers are truly demanding more from the companies with which they do business. Today's shoppers are looking for ethical, eco-friendly brands that put people and the planet ahead of profits.” One need not look far for prominent examples of consumers' moral outrage over injustice and unfairness in the marketplace. Critiques of discrimination and unequal economic outcomes are abound, and often spread like wildfire in today's virtual spaces. Whether these changes reflect a fundamental shift in consumers' preferences or merely platformed and elevated by social media, it is undoubtable that companies face increasing pressures to behave more ethically. One survey of UK consumers found that more than half of those surveyed wanted companies to take a stand on issues they care about such as sustainability, transparency and fair employment practices (Accenture Strategy 2018). Companies that do not align with customer beliefs pay the price. Consumers avoid sellers they perceive as unfair and are more likely to demand refunds, complain, and spread negative word of mouth upon encountering unfair tactics (Fehr and Schmidt 1999; Xia and Monroe 2017; Xia, Monroe, and Cox 2004). In this research I study consumers' fairness concerns in two domains. In essay 1, I examine the perceived fairness of demographic price discrimination. In this joint work with Alixandra Barasch and Vicki Morwitz we study the demographic price discrimination in the digital age. We find that consumers' fairness perceptions depend on who consumers believe is responsible for implementing it--a person or an algorithm. Contrary to the substantial literature emphasizing consumers' algorithm aversion, we show that consumers view demographic-based price discrimination as more fair when prices are determined by algorithms (versus humans). We also offer evidence for a mechanism we propose: when demographic price discrimination is performed by algorithms, people are less likely to attribute the discriminatory action to the agent's moral agency. In essay 2, I explore consumers' perceptions of the fairness of the gender pay gap. In this work, conducted with Alixandra Barasch and Amit Bhattacharjee, we examine how consumers evaluate unequal economic outcomes arising from explicitly unbiased institutional processes. Three studies find that men perceive gender pay gaps as equally fair regardless of direction, while women perceive the exact same outcomes as more indicative of institutional unfairness when they are disadvantaged than when men are disadvantaged. Our findings highlight one reason for the contentiousness of discussions on outcome inequality: evidence for institutional discrimination and perceptions of what constitutes unbiased treatment may be in the eye of the beholder.