Qiu Lingyun

With the explosive development of digital economy, the emerging Internet enterprises and traditional enterprises in transition have collected and analyzed the massive data of online users. Not only can they provide consumers with highly personalized products and services according to characteristics of consumer behavior, but they can also make differentiated pricing by accurately grasping consumer's product preference and price sensitivity.

Differentiated Pricing, also known as price discrimination in microeconomics, refers to the pricing strategy that manufacturers charge different prices for the same product from different customers. In microeconomics, there are three types of price discrimination. Among them, first-degree price discrimination refers to that manufacturers set different selling prices for each unit of product according to the highest price consumers are willing to pay, which is also considered as "perfect price discrimination" that can maximize the profits of manufacturers. However, due to the lack of consumer information, first-degree price discrimination was not feasible in the traditional economic model. Businesses could only use second or third-degree price discrimination to distinguish different types of consumers.

With the rapid increase of consumer data obtained in the era of digital economy, retail enterprises have been able to realize differentiated pricing based on individual characteristics of consumers which is very close to first-degree price discrimination on the technical level. However, a small number of enterprises that have tried differentiated pricing have encountered strong opposition from consumers. This is mainly because when consumers know that they suffer from differentiated pricing, especially when they are charged higher prices, they have a strong perception of unfairness, which in turn leads to a very significant negative perception of the enterprises implementing this practice. In the past two years, the criticism for price discrimination in media has also reflected public disapproval of the practice. With the popularity of social media and various online shopping communities, the ability of consumers to share price information has also been rapidly improved. Thus enterprises are stuck on a difficult problem: how to achieve profit improvement through differentiated pricing while minimizing the negative psychological feelings of consumers?

Based on the framing effect of behavioral economics, this study explores the responses of consumers to several different presentation of pricing differences. The findings can not only help enterprises to solve the long-standing problem effectively, but also expand the relevant theories in consumer behavior research.