A note on the future of personalized pricing: cause for concern

Jean-Pierre I. Rest (j.i.van.der.rest@law.leidenuniv.nl), Alan M. Sears (a.m.sears@law.leidenuniv.nl), Li Miao (lm@okstate.edu) and Lorna Wang (lorna.wang@surrey.ac.uk)
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Jean-Pierre I. Rest: Leiden University
Alan M. Sears: Leiden University
Li Miao: Oklahoma State University
Lorna Wang: University of Surrey

Journal of Revenue and Pricing Management, 2020, vol. 19, issue 2, No 4, 113-118

Abstract: Abstract To date, pricing and revenue management literature has mostly concerned itself with how firms can maximize revenue growth and minimize opportunity cost. Rarely has the ethical and legal nature of the field been subjected to substantial comment and discussion. This viewpoint article draws attention to some inherent ethical concerns and legal challenges that may come with future developments in pricing, in particular online personalized pricing, thereby seeking to initiate a broader discussion about issues such as dishonesty, unfairness, injustice, and misconduct in pricing and revenue management practices. Reflecting on how legislators and regulators in Europe seek to limit recent developments in personalized pricing, we argue that not much is to be expected from the legal system, at least not in the short run, with regard to guiding the pricing and revenue field in setting and implementing minimum standards of behavior. Scholarly attention should however not only be directed to the legal challenges of new forms of direct price discrimination, such as algorithmic personalized dynamic pricing, but also to the ethical and legal implications of more granular forms of indirect price discrimination, through which consumers will be allowed to ‘freely’ sort themselves into different microsegments, especially when the ‘self-selection’ is enticed by deceptive personalized applications of psychological pricing and neuromarketing.

Keywords: Personalized pricing; Algorithmic pricing; Behavioral targeting; Price discrimination; Ethic; Legal; Revenue management; Psychological pricing; Neuromarketing (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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DOI: 10.1057/s41272-020-00234-6

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