When Dealing With Fair‐Minded Consumers: Is More Product Quality Information Always Better?

ABSTRACT This paper examines the quality information disclosure strategy of a monopolist when faced with two distinct consumer types: fairness‐sensitive and fairness‐insensitive consumers. We develop a game‐theoretic model that accounts for consumer heterogeneity in willingness to pay and their rational updates to quality expectations based on the firm's choice of disclosure or nondisclosure. Our findings reveal that the firm's nondisclosure can alleviate price reductions driven by fairness concerns among consumers. The resulting opacity in quality information, stemming from the firm's nondisclosure strategy, enhances profitability by enabling the firm to charge a higher retail price as consumers' fairness concerns escalate. Furthermore, we demonstrate that consumers' fairness concerns can act as a barrier to quality information disclosure and exert a non‐monotonic influence on consumer surplus, which contrasts sharply with the conventional wisdom that such concerns unequivocally benefit consumers.