Slashdot Mirror
Privacy Incursions to Support Price Discrimination
An anonymous reader writes "BusinessWeek has an interesting interview with academic Andrew Odlyzko about how increased corporate spying will inevitably lead to targeted pricing and how this system can be abused." The paper (pdf) makes interesting reading. Very good insights into the reasons why businesses want to get to know you.
I suspect that this field will become increasingly important in the years ahead. One problem (from the supplier side) in the current economy is the lack of pricing power available to boost earnings. Partly due to influences like the availability of product information on the web, consumers are more willing and able to find the best deal on a given item, rather than just march down to the store and pay MSRP.
People also have to realize that price descrimination is and has been all around us for a very long time. Coupons, "daily specials", business-class travel, etc. are all examples of this. There should be plenty of opportunities to increase price descrimination without impacting customer privacy (i.e. the temperature-sensitive drink machine in the article).
Stop by my site where I write about ERP systems & more
Legality is dependant on how much you are able to spend.
For instance, a tow truck or taxi driver may charge a well-to-do suburban driver who breaks down in the inner city several times the going rate, just to get their rich butt to safety.
And imagine the poor diabetic about to go into insulin shock at the pharmacy, why, they'd pay treble to stave off a medical emergency.
Now, a nice sense of business ethics, based on such hokey premises such as "Thou Shalt Not Steal" might mitigate this, but I have trouble imagining it in our liberalist society.
A. Rightmann
"So, I'd like to buy a lamp. I'll pay a dirham for it."
"Bah, this lamp is made of the finest brass, five dirhams is the least I can accept!"
"Eh... out of pity, I might be persuaded to go as high as two dirhams."
"Sir, I can see you are a man of discriminating taste. As a special favor, I will let it go for three dirhams."
"Done, provided the lamp is filled with oil."
"You drive a hard bargain sir. Done."
All the creatures will die, And all the things will be broken. That's the law of samurai. (Jubai, 1605)
"Price Discrimination" sounds evil, but really it's used every day, you've seen it a thousand times, and it's never bothered you before. Been to a movie lately? How come a ticket costs less if you're a senior citizen? Are the costs of showing a movie to an old woman significantly lower than that of showing it to a young man, such that a $3 difference in ticket price is warranted? Same thing for airline seats, amusement park tickets, etc. It's really no big deal.
We don't have a state-run media we have a media-run state.
It seems that companies claiming prices as 'confidential' want it all their own way. That doesn't seems like a very pure form of capitalism.
Not really... I mean, sure he could get charged $1000 for a pack uf gum, but this is still capitalism we're talking about here. If you try to charge him $1000, then I'll ofer him $999. But then, someone else will be willing to sell it to him for $800. Eventually, the price will be driven back down to where it would have been anyways. That's how capitalism works. Even if we all know that he is suer rich, we all want to get the sale, and all it takes is one person to be charging $1.50, and then we all have to affer comparative prices, or we'll go out of business.
It may sound awful mean, but remember that the possibility of changing very high prices on occasion may be the only thing that makes the good available in the first place. The diabetic will surely be sorry he's not getting his insulin cheap, but if the possibility of his getting taken advantage of and providing big money to the pharmacist is the only reason the pharmacy is there in the first place, and otherwise the diabetic would die, then he can't be very sorry.
In the case of the taxi driver, remember that prices can't get too high, because (in the absence of collusion) otherwise other taxis would step in, at a price approximating their actual cost, not the benefit to the consumer, under perfect competition.
There are some laws limiting price discrimination. The most widely discussed is the rule of maritime law that a salvage ship can only charge a reasonable price, even if it's the only one around and gets the sinking ship's owner to promise something higher. There is extensive economic analysis of such rules; the general conclusion is that they are not useful, subject to the usual long list of exceptions.
There's a broader question, though. Suppose price gauging is "immoral" according to our common sense but its existence in a particular case is Pareto efficient: that is, it makes everyone in the world better off. Utilitarians would say that, in such a case, we are obligated to discard our moral intuition to make everyone better off. Do you disagree?
I Can't Believe It's A Law Firm, LLP does not necessarily endorse the contents of this message.
I recall buying my last car, where the salesman had to try several tactics in succession before realizing I wasn't the typical dumbass.
The tactics he tried were set up to catch people of decreasing stupidity, but, because he didn't know who I was, he had no choice but to make guesses about my intelligence and willingness to spend money. This means I was slightly empowered as a consumer, and the deck wasn't entirely stacked in the dealer's favor.
Now, imagine if the salesman had access to my entire purchasing history. If you think salespeople are agressive now, I don't want to imagine what it will be like if they use our own experience against us! The credit score is already bad enough as it is.
Healthcare article at Kuro5hin
These systems are busy trying to figure out who's eager to blow big bucks (to charge him through the nose) and who's barely interested & very price sensitive (to charge their lowest price). Guess what - if you're willing to act poor when Big Bro's watching (and quietly pay cash after dickering price whenever you can for your luxuries), you can make this system work for you.
Much of the social status of being rich (vs. poor) comes from the blow-through-the-dough-and-don't-have-to-care (vs. sweating every penny) lifestyle & attitude. This system ain't much different from a bazaar 3000 years ago - the merchants knew perfectly well who was rich and who was poor.
It's easy to make up & spread cool- and credible-sounding stuff. Finding & checking hard facts is hard work.