September 11th, 2013
Economics professor Benjamin Shiller’s research paper on customized online pricing – charging different consumers different prices for the same product – was recently featured in a Forbes article. The article summarizes his paper, and then adds several insightful thoughts about much wider implications. Shiller’s referenced research investigates how much more profitable customized pricing would be when the price an individual is charged is based on his/her online browsing history, as opposed to a single demographic variable (e.g. student discounts). The answer is a lot, implying firms are more likely to implement the strategy, leading to pricing that may be viewed as unfair.