Does AI Disclosure in Discriminatory Pricing Backfire? The Moderating Role of Price Sensitivity and Explanation of Price Differences

Abstract

This research aimed to examine the moderating role of price sensitivity and explanation for price differences in the relationship between AI disclosure and consumers' revenge behavior, as well as to explore the potential mediating effect of inferred motives. A scenario-based lab experiment was conducted, involving 121 participants who engaged in an online airline ticket booking context. The findings of this study revealed that the positive impact of AI disclosure on revenge behavior was amplified among consumers with high price sensitivity, and this relationship was mediated by inferred motives. Additionally, the provision of explanations alongside AI disclosure was found to increase revenge behavior. These findings contribute to the understanding of consumers' psychological processes and revenge behavior within the context of discriminatory pricing empowered by AI. Moreover, the study offers practical implications for managers aiming to mitigate the negative consequences of discriminatory pricing.