FAIRNESS PERCEPTIONS AND UTILITY MAXIMIZATION pp. 239-248
Authors: Irene Daskalopoulou, Dep. of Economics and Management, Univ. of Peloponnese, Greece
Abstract: Available literature suggests that fairness perceptions underlie consumersí economic transactions. Viewing economic transactions, as a social practice requires that the nonlinear effects of consumersí judgments over the outcome they receive should be incorporated into the theoretical and methodological models of analyzing consumersí choices among alternative outcomes. Here a model is proposed regarding the incorporation of fairness perceptions into consumersí choices among alternative supermarket providers. Analysis is based on two assumptions. The first one relates to that consumers patronize stores using their own evaluations of the price and service fairness (overall fairness) that they expect to receive from each provider, as the underlying mechanism of patronizing alternative stores. The second one relates to that threshold levels of fairness exist and constitute the critical point at which a decision to transact with a specific provider turns from negative to positive and thus a transaction is observed. Based on these assumptions we formulate the hypothesis that utility maximizing consumers might actually be viewed as consumers maximizing the utility deriving from a patronizing process. Important implications arise from such a theorization. On the one hand, an analytical context is proposed for incorporating incommensurable human values and intangible constructs such as overall fairness perceptions into the methodological tools of consumersí behavior analysis. On the other hand, a means is provided for empirical research over consumersí expenditures to derive indirect, yet important, information as regards the unobservable process of patronizing stores. Using the shares of expenditures allocated to each provider as an approximation of the underlying transaction pattern (patronization pattern), the efficiency of households in allocating overall expenditures to different providers might be measured. Thus, observed deviations from an efficient allocation might be taken to account for the material value that is subject to the non-linear effects caused by human values and constructs underlying individualsí economic transactions. In addition, this material value is the sum of expenditures shares weighted by the fairness ascribed to alternative prospective outcomes.