ABSTRACT
The various pricing analyses and optimal solutions considered in previous chapters have a few things in common: they assume that the prices we charge now will not affect future customer behavior; they do not consider ethical aspects; and they ignore the law. However, it is extremely important that you are aware of these aspects. Pricing theory asserts that a firm’s objective is to maximize profits and, consequently, prevailing prices do not influence future customer behavior. However, customers are not super-rational beings, but are influenced by, among other things, reference prices and perceptions of fairness. Psychological research shows that fairness affects a wide range of human emotion, attitude, and behavior. Therefore, it is important that the firm evaluates the consequences of various pricing strategies and how fairness affects these.
