6 ms·

The behavioral cost of personalized pricing

• sandworm101 9mo ago
  New job: poor person personal shopper. Someone with a "poor" profile follows you around the store so you can use their quoted prices instead of your own. Or travel agents that only book flights for you using early-2000s flip phones, shielding clients from the iPhone premium price.
  • Retr0id 9mo ago
    The "poor" people would be getting the raw end of the deal - their profile would soon become "wealthy" and they'd have to pay more themselves.
    • pixl97 9mo ago
      Poor people always get screwed over the most, desperate people are easy to take advantage of and there will always be there to exploit them.
    • yencabulator 9mo ago
      New job: "look poor" behavioral assistant. They manage an account for you that signals low purchasing power.
  • nighthawk454 9mo ago
    I recall an article on personalized pricing that had it reversed - the poor pricing is actually higher, bc it's harder to buy more at bulk rate / shop around / just not buy it (discretionary).
    • account42 9mo ago
      Yes, aka the boots theory or at least similar to it: If you can afford a higher upfront price you have options with a better value over the products lifetime - bulk discounts are just a special case of that.
• OGEnthusiast 9mo ago
  Might be a good idea to get a cheap secondary Android phone to avoid having to pay the iPhone ecommerce/digital tax that companies like Uber will upcharge you for.
• footy 9mo ago
  aside from everything else this seems ripe for abuse of people with cognitive disabilities
• noitpmeder 9mo ago
  I wish it were easier to have ephemeral interactions with companies. Why do I need a tracked and maintained user profile for things like Uber? Shouldnt it be possible to only interact for the single transaction, ending as soon as I leave the car. I imagine trying to continuously cycle accounts will run into various blocks, e.g. you can't sign up using your email/phone/credit-card because it is already linked to an existing account. I hate the way the world is going. As the article states, Uber can probably classify my exact spending habits to maximize a price I'm willing to pay for. But id much rather them have to treat me as a new soul every time, and hopefully along those lines have to fight a bit harder to get my business.
  • amelius 9mo ago
    On the other hand, if you're an Uber driver it is nice to know the person getting into your car was rated positively (not a dangerous individual, smelling of alcohol, etc.) But I have actually no idea if drivers can say "no" based on ratings. In general I would agree with you.
    • SpaceNoodled 9mo ago
      I'd rather have those smelling of alcohol be passengers than drivers.
  • mschild 9mo ago
    This is why I refuse/back out of eshops that require accounts. Has the unintended upside that I often think twice about buying something and often dont. If I really need something though, ill create an account with a filler email, receive my product, and then make a really tedious (for the company) GDPR request because sometimes I like to be petty. Then I delete my account. If I need something from that store again, I will repeat that process.
  • duped 9mo ago
    A key part of uber is the ratings system and bans, so they do want to track your behavior across interactions with their drivers (or riders, in the flip side).
• cortesoft 9mo ago
  There was an article about targeted advertising a number of years that really changed my perspective on it called, "Targeted Advertising Considered Harmful": https://zgp.org/targeted-advertising-considered-harmful/ https://zgp.org/targeted-advertising-considered-harmful/ The basic idea is that the real value in advertising is as a signaling mechanism, and targeted advertising removes most of that signal. I feel like personalized pricing has some of the same issues, in that it erodes consumer trust and makes it more and more difficult for consumers to confidently spend their money in the market. I am not sure how we fix the problem, though, because it is a collective action problem; any individual company will need to use personalized pricing to compete, but that behavior will hurt the economy as a whole. I don't know the solution to this problem.
  • deleted 9mo ago
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  • rjtavares 9mo ago
    Why isn't making it illegal a solution?
  • wisty 9mo ago
    There's bqsically IMO two types of ads - marketing and sales. Marketing ads are signalling, brand recognition, etc. You want the cool earbuds that everyone knows. You want to buy them from a big, reputable company with good r&d. Sales is simpler - click on the ad and buy the product. It tends to be a bit sleasier - sales doesn't care as long as it makes a sale. There's often a bit of tension between sales and marketing. A 50% ooff exploding offer can be good for sales in the short term, but can make the brand look cheap.
    • aetherson 9mo ago
      The in-industry terms for these are "brand marketing" and "performance marketing," FWIW. Brand marketing is the first thing, performance marketing is what you're calling sales.
  • londons_explore 9mo ago
• cameldrv 9mo ago
  A lot of the theoretical underpinnings about why capitalism is a good system are based on the law of one price. Especially in the context of an oligopoly, being able to price-discriminate on such an individual level leads to really bad outcomes.
  • gruez 9mo ago
    >A lot of the theoretical underpinnings about why capitalism is a good system are based on the law of one price. Why? Competition for instance, works fine even with price discrimination, because bidders will still compete with each other on offering the lowest price.
    • deleted 9mo ago
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    • cameldrv 9mo ago
      In the context of an oligopoly, normal pricing pressures break down, especially in real world conditions where price fixing is rampant.
• aetherson 9mo ago
  Price discrimination is bad. It's worth trying to ban. You'll never stop 100% of it (and trying to go too over-the-top in terms of stopping it would not be worthwhile), but this is a useful area for regulation.
• gwern 9mo ago
  > Who knows why? I’m usually more willing to spend than she is, and I bet that's represented on my user profile. I was paying with a gift card, which surely contributes. Maybe it was a price scraping update, comparison shopping detection, or a system that explores “face-in-the-door” high prices before backing down. From the outside, no one really knows. The most obvious possibility omitted is that your wife got the first, easy, cheap car and then Uber had to quote you a higher price to get a second car. Cars don't fall from the sky; if two people successively ask for bids, how else could it work? What if the app quoted you both the cheap price for the only car within X blocks, and you bought it before she did? Is it suddenly going to go 'oops sorry, changed my mind, it now costs twice as much'? Sounds like a very bad experience to me! More sensible to give the first person a low quote and then when - unexpected and unpredictably - someone requests something similar, quote them the higher price reflecting the sudden local micro-shortage.
  • djoldman 9mo ago
    That raises an interesting question: if 10 people in a room request ubers without confirming the ride-hail, does the price go up for successive requests?
    • gwern 9mo ago
      Hm... I think I would predict that it would depend on speed because querying prices reveals information, but not accepting also reveals information, so I would expect that it would go up initially due to an expected shortage, but then when it becomes clear that no one is accepting, it reverts to normal or lower, because that suggests low urgency or willingness-to-pay compared to what the models had forecast for that exact location & time, so they have to be offered lower prices to accept at all. (This is the flipside of personalized pricing: it's also lower prices, as noted in some of the anecdotes, although he mostly emphasizes the potential for higher prices.)
  • bobbiechen 9mo ago
    (author here) I believe I had checked first in this case, which is why it was surprising. Sorry not to mention that in the post. This was in San Francisco, and there were multiple cars shown on the map. In my experience, I usually don't see this kind of price change before the request has actually been confirmed - and I have seen Lyft change the price between showing me the estimate and confirming the request (with an apologetic confirmation dialog, possibly only after some holding period has timed out). Maybe in my case where the high quote came first, the opposite scenario happened - a glut of drivers appeared between my request and hers, raising supply. Opaque pricing is powerful partly because we don't know. This enables people to construct a plausible story to explain any price.
• deleted 9mo ago
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• didgetmaster 9mo ago
  This is why I rarely join those 'customer loyalty' programs that almost every store offers. I say 'no thanks' when the cashier wants to know my phone number, even if I am paying cash. It is almost impossible to remain anonymous in the consumer space, even if you are really trying.
  • AtheistOfFail 9mo ago
    The day I learned of ghost Facebook profiles, I realized fighting back was impossible.
  • cornonthecobra 9mo ago
    the only place i have one is a grocery store where their loyalty program price is listed on the shelf tag and is lower, often by quite a bit (a third to half off is common). even then, i use one of the meme phone numbers (local area code + 867-5309, 678-999-8212, 281-330-8004, etc.).
  • digiown 9mo ago
    Being anonymous is actually pretty expensive. The loyalty program is a price discrimination mechanism: going through the trouble of clicking through coupons, discovering deals, signals that you have a higher price sensitivity. The default of taking no action signals a higher willingness to pay. Also, by paying cash, you're subsidizing the card users, some of whom get a bit of that back.
    • em-bee 9mo ago
      i am paying for my privacy. or, i am refusing to sell out my privacy for any amount of money. and i disagree that it is expensive. the difference can't be more than 10-20%. that's worth it for me.
      • digiown 9mo ago
        It's not clear you're actually buying any privacy. The cameras they have in stores will be used for tracking customers soon anyway, and not having a tracking identifier associated with your transactions make you stick out like a sore thumb.
• jrowen 9mo ago
  Is it clear that this will not go in a direction that actually pushes back on wealth inequality? It seems distasteful on the surface of course but could it be macroeconomically a good thing? Obviously the fatal flaw is that capitalists are running it for their own gain but logically how would it play out?
  • citizenpaul 9mo ago
    I think you answered your own question. This is like the ultimate version of going back 1000+ years economically and socially. Where a merchant would size up how desperate or rich they thought you were and charged you based on that rather than a reasonable price. It wastes the time of the poor whom must be willing to walk away without anything when they can "afford it" and further deepens the problems when you are desperate. Except now they can also spy on you 24x7 and buy information from other spys while they make their decisions and have 100% information asymmetry. Now they also HAVE to charge you more to make back the money they spend spying on you rather than just running a normal business. You already answered your own question though. It is the peak of exploiting power wealth disparity, there is zero chance of it being used beneficially.
    • jrowen 8mo ago
      On some level though it does jive with "from each according to his ability, to each according to his need." Do you have an issue with textbooks being cheaper in India? If we live in a more socialist future where there are mechanisms to prevent corporate greed from accelerating wealth inequality, I feel like it could find a beneficial equilibrium. I think, given the choice, most [non-luxury] businesses would rather have more customers than price out poor people entirely. They would be subsidized. Put another way, do "one price for everyone" and "customer blindness" benefit rich people or poor people more?
      • deleted 8mo ago
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      • citizenpaul 8mo ago
• Nevermark 9mo ago
  Personalized ad targeting and personalized pricing are both predicated on mass surveillance and then leveraging that for manipulation. Both sides of that toxic combination are compounded in significance due to severe two-way centralization of those markets. The result is leverage pervasively used to select information competitive with customer value. And also used to drain margins from ad buyers and all upstream economic input. People complain endlessly about the downside to surveillance and personalized manipulation, but don't seem to have an appetite for more than that. I view the centralization, surveillance and manipulation as all ethical problems, because they all involve negative externalities (weaponizing unpermissioned or dark-permissioned information, manipulating people based on their past behaviors and characteristics, and bleeding product providers). Scalable ethical problems that pay, are not resolved by any means that don't resolve the ethics with economics. I.e. law or hard regulation, backed up by considerable fines ensuring risk-reward losses for perpetrators, and criminal charges for serious or repeat offenders. Given the tremendous centralization and privacy violations, the problem is orders of magnitude worse than normal price fixing.
• Telaneo 9mo ago
  I'm wondering whether or not the attitude towards shoplifting and the like is going to loosen with more and more dystopian shit being pushed. I can imagine a world where small amounts of shoplifting become somewhat acceptable because every single shop is part of some corp, and every single corp in the biz is hostile by default.
• lazylizard 9mo ago
  is https://en.wikipedia.org/wiki/Price_discrimination https://en.wikipedia.org/wiki/Price_discrimination very different from buying things off ebay? why would salespeople even exist if there was perfect information? so people want efficient markets and price discovery..but only when it results in them paying lower prices? otherwise the law should step in and preferably set prices by fiat or magic? ok my personal take on buyng knick knacks in chatuchak is.. assume everything is cheap , thats why i come to thailand, i can afford this...
• youniverse 9mo ago
  My friends just booked a trip to Hawaii on booking.com and they were each shown different prices for their hotels: $1300, $1500, $1700 Ridiculous.
• jarbus 9mo ago
  This is why I like buying in a physical store. I also think the only solution to this practice is really just to avoid buying as much as possible. I never get food delivery and only get uber to go to and from the mechanic. Ditto for the medical system, I got charged $400 for a strep throat test. I’ll just stay home until I feel better
  • poulpy123 9mo ago
    I've read recently an article about some retailers in the US starting to use surge pricing (price varying during the day). The technology to do the same based on who looks at the price tag is already here, it's just blocked by privacy laws and the risk of bad reaction when you'll notice that prices decrease when the guy next to you looks at the product
• poulpy123 9mo ago
  > It’s the invisible hand at work. It's not the invisible hand, it's the very material effect of both surveillance technology and social and psychology studies. I find it very dystopian what is described here. Enshittification at the high level and the end of trust Of course there was always wiggle room, but they are either expected (like for the case of prices, the sales, haggling in some countries), or at the marge, but once everything around you is controlled by the algorithm that knows you better than yourself, what's the point ? Yeah there will always be people with the mindset allowing them to thrive in these situations, and I'm maybe a dinosaur looking at the metro coming down. But I don't believe that we can live in a sane society dedicated to extract the maximum value possible from individuals before throwing them away like garbage and where nothing is stable or predictable.