Context and the Perceived Fairness of Price Increases Coming out of COVID-19

Objective: As the U.S. economy responds to prolonged COVID-19 disruptions, it is important to understand what factors affect the perceived fairness of pandemic-driven price increases. Methods: Participants read a vignette and rated how fair they found a pandemic-driven price increase. Versions vary (1) the source (hardware-store products or bus fare), (2) the magnitude of the price increase (6 percent or 18 percent), and (3) the tone of an initial description of COVID (positive or negative). Results: The price increase was perceived to be fairer when it involved the hardware store or when it was smaller. The relationship between fairness and magnitude was context-specific, as fairness perceptions were insensitive to the magnitude of the price increase in the bus scenario or when the initial description of COVID had a positive tone. Conclusion: Retailers and municipalities may face different fairness constraints as they consider pandemic-driven price increases. The tone of COVID information may affect price fairness through its impact on sensitivity to magnitude.