Personalized Pricing and the Value of Past Purchase Histories: An Empirical Perspective

Isis Durrmeyer, Fournel, Jean-François and Mario Samano

No 22038, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Grocery loyalty programs record purchase histories that retailers do not use to personalize prices. We measure how much they forgo with a structural model of demand and pricing in which a Bayesian seller learns preferences from past purchases and personalizes prices. Profits rise by 7.1\% with one-year histories, capturing two thirds of the gains under perfect knowledge of preferences. Most consumers (84.1\%) gain, but the losses of the minority outweigh these gains, and aggregate consumer surplus falls. An optimal loyalty program charges a membership fee, yet most consumers enroll, because opting out signals price insensitivity.

Keywords: behavior-based price discrimination; Bayesian learning; Value of information; Loyalty rewards (search for similar items in EconPapers)
JEL-codes: D12 D42 L11 L81 (search for similar items in EconPapers)
Date: 2026-10
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