Taken for Suckers: Causal Attributions of the Consequences of Overcharging Sales Tax in Daily Deal Transactions

Abstract

In an experimental setting, we examine consumer reactions in daily deal transactions when they are overcharged sales tax. The overcharges arise when the daily deal operators subsequently provide additional discounts to consumers unbeknownst to the merchants. Drawing on social status and attribution theories, we posit that consumers will ascribe causes for the overcharges to the merchants because of their lower status when compared to the higher status of the daily deal operators. We then examine the main and moderating effects of the overcharges on the behavioral intentions of consumers to repurchase from merchants. Merchants’ ability to verify correct sales prices, descriptive social norms, and the trust placed in tax accountants explain variations in repurchase intentions.  Overall, the results suggest that ethical norm violations by higher-status entities results in the transfer of negative consequences to lower-status entities.  Forensic accountants can be instrumental in helping businesses to understand these effects.