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.

Comments

Price manipulation by consumers

[Anonymous Coward]

Couldn't this be turned around by making false online identies? Tailoring it to garner the best prices?

Re:Price manipulation by consumers

[pla]

Couldn't this be turned around by making false online identies? Tailoring it to garner the best prices?

Yes, it could, thus the only reason I don't really feel all that concerned about the possibility of vastly different prices for different people.

Not just online, though, but more importantly, in the real world as well. From the article, for example, it talks about the diehard Coke drinker paying twice as much because the company will exploit his preference. Easy solution? Find a similarly diehard Pepsi fan, and each buy the other's soda for them. So both pay less than the mean rate, as the respective companies try to lure each over to their own product with extremely discounted prices.

Now, in some situations this wouldn't work. But for anything costing more than a few bucks (electronics, for example), "shopping around" would go from "check pricewatch" to "ask grandma (or someone who would normally have significantly different buying habits than yourself) how much she can get that great new toy for".

Finally, a way to screw corporate America with their own tools of torture. Bring it on!

Differential Slashdot Subscription pricing next?

[neye_eve]

Now don't you go getting any ideas...

Actually, my last job was as a pricing analyst, and it was all about this topic. How to price differentiate while staying within the bounds of the law. Arguably this increases overall economic efficiency.

Felt kind of weird, however, trying to figure out how to wring every possible penny out of the small buyers but coming back, while at the same time keeping the national accounts in check with huge price reductions (50% or more). The 3rd factor is making sure that the little guys never knew about the big boy pricing, or at least never knew more than the fact that buying more could be a positive thing for their own price structure.

Keeping small guy prices high is easy.
Keeping big guy prices low is easy.
Keeping the both happy customers is not.

Re:It can easily be abused by unscupulous merchant

[mccalli]

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.

Until an unplanned meeting with some black ice and a nearby tree, I used to own a Jaguar XJR. Now, big luxury cars depreciate fast and this Jaguar was seven years' old at the time of its demise. In other words, most people's year-old hatchbacks cost more than this car's second-hand value.

Despite that, the majority of people I dealt with who saw the car decided that I was obviously stinking rich, available to be fleeced and took the opportunity to try and rip me off. This would include car mechanics to a small extent (it was main-dealer serviced most of the time, you get ripped off there anyway) but also to workman calling at the house. Prices quoted for the same job varied enormously depending on whether I left the Jaguar parked outside the front or whether we left the MX-5 (Eunos Roadster/Miata by another name) parked outside.

Price discrimination? Yep, know all about that.

Cheers,
Ian

Examples of Price Discrimination

[Anonymous Canard]

There is already price discrimination. Every time I walk into a grocery store I pay a premium for my food in order to maintain my privacy by refusing to use a discount card. Realistically I represent a small minority of consumers who values privacy over money and the market can charge a premium for selling to me and others like me.

It pisses me off every time I'm in a store, but I only get really angry when the checker says something like 'Sir, you would have saved $15 on this purchase if you had used your discount card. Would you like me to give you one now that I'll use for this purchase.' If I have to pay outrageous fines to maintain my privacy, I'd rather not know how outrageous they are.

Recently (probably as complaints have risen from my demographic), most of upscale markets in our area have started granting the discount anyway if you tell them that you value your privacy, and they swipe a register card instead. Presumably they now are collecting data on privacy freaks, but at least it is as a group rather than as individuals.