Dynamic pricing refers to flexible price adjustments based on, for example, supply and demand or individual customer data. Previous research has shown that consumer reactions to dynamic pricing are mostly negative, including lower fairness perceptions and (re-)purchase intentions. We contribute to this literature by examining consumer stress as a further psychological response, as price changes can lead to feelings of being overwhelmed, reduced control, and emotional tension. We propose that two components of dynamic prices are relevant for stress: mere price fluctuation and different directions of price changes.
We conducted a preregistered, between-subjects online experiment. Participants (N = 389) read a purchase scenario where they observed the price of a laptop over seven days. Price development varied by experimental condition: Prices either remained static or fluctuated with no trend (starting price = final price), a decreasing trend (starting price > final price), or an increasing trend (starting price < final price). Prices were based on real-world price developments, keeping the final price constant across conditions to measure reactions to price development rather than absolute price level. After seeing all prices, participants indicated their current stress on an adapted version of the 10-item Perceived Stress Scale.
As expected, dynamic prices with an increasing trend led to higher perceived stress than dynamic prices with no trend and with a decreasing trend. Contrary to our expectations, dynamic prices with no trend did not lead to higher perceived stress than dynamic prices with a decreasing trend or static prices.
Our results indicate that the direction of price changes, specifically an increasing trend, appears to be the key driver of perceived stress. Thus, managers should consider potential negative business consequences of high consumer stress (e.g., reduced trust). For consumers, awareness of how price developments affect stress can be helpful to improve their purchase decisions.