Price discrimination appears to be alive and well on the Internet.
A group of professors at Northeastern University in Boston examined 10 major e-retailers along with with six hotel/rental car sites to determine if they implement price discrimination or price steering. The answer was yes.
"We saw price steering … with the order of search results varying from user to user," wrote Prof. Christo Wilson, in a summation of the research appearing on The Conversation. "We saw price discrimination from several retailers…with product prices varying from user to user."
Various user attributes appeared to trigger the price differences, ranging from the type of device used to buying history to operating system. For example, one travel site reduced hotel room prices by around $15 for smartphone users. (You can read the whole study here.)
"Unfortunately, the business logic underlying much of this personalization remains a mystery," Wilson concluded.
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Actually, while the logic of the various algorithms used by the retailers may be mysterious, the overall reasoning is not. Charging what the market will bear or what different customers will bear is a long tradition.
If you live in a ritzy neighborhood, the plumber is likely to add a little more to the bill. Car salesmen routinely size up prospects by their dress and kind of car they drove onto the lot. Airlines routinely charge different prices for seats on the same flight (and have given the practice the MBA-friendly term "yield management").
Of course, no one likes it when price discrimination hits them negatively. Indeed, the researchers noted the backlash against Amazon, Staples, and Orbitz over past pricing revelations. Nevertheless, the fact that it goes on is hardly surprising.
