Why online personalized pricing is unfair

Online retailers are using advances in data collection and computing technologies to personalize prices, i.e., offer goods for sale to shoppers at their reservation prices, or the highest price they are willing to pay. In this paper, I offer a criticism of this practice. I begin by putting online personalized pricing in context. It is not something entirely new, but rather a kind of price discrimination, a familiar pricing practice. I then offer a fairness-based argument against it. When an online retailer personalizes prices, it competes unfairly for the social surplus created by a transaction. I defend this argument against objections, and offer a simple remedy: online retailers should either disclose that they are personalizing prices, or stop doing so.

Automated summary

Online retailers are using data and computing technologies to personalize prices, potentially leading to unfair competition for social surplus. The author suggests that online retailers should either disclose personalized pricing or stop the practice.