Surveillance Pricing: Exploiting Information Asymmetries

NDlurker

This is really making me consider going back to all cash and local purchases. Maybe prepaid debit cards and a PO box for when I need to order something online.

bestouff

This can't happen in EU. Thanks again.

neeeeeeal

Based on the title, I assumed this would be about how the consumer could grasp and then counter-utilize the pricing differences these algorithms produce. For example, understanding that you are being “targeted” by these algorithm for premium extraction and taking measures such as spinning up VPNs, clearing cache/history, etc to save the consumer from overpaying. Seems like a good market for such a product would exist…

2009mobile

The article describes Uber's surge pricing as a form of surveillance pricing, but this is misleading. The primary purpose of surge pricing isn't to maximize profit, it's to increase supply. Dynamic pricing in a 2-sided network is different than in retailing.

teeray

It would be abhorrent to let humans change the prices of goods and services based on the color of your skin, age, gender, religion, etc. However, if a computer does it, that’s apparently just fine.

abrownbear

Dope piece.

throwaway85825

The solution to such information asymmetry is to mandate disclosure of all algorithms and data used in setting the price.

bit1993

I don't buy this. Doesn't supply and demand fix this unless of course you are dealing with a monopoly and have no choice. Don't customers find the most affordable goods in the market place and aren't goods priced competitively? What am I missing?

w10-1

Price discrimination has been studied and practiced in various firms for decades. Information assymmetry is endemic to virtually any market relation other than haggling over marbles. People feel their economic weakness as unfair. What's really new here, warranting regulation? The problem is that the value of these information markets creates all the wrong incentives. Companies layer surveillance into everything to subsidize other businesses, and people expect free search and email, and cheap home security even at others' tiny cost. It's too bad these services live forever as cash cows to subsidize crazy ideas and schemes. They should graduate to public utilities once the product stabilizes.

BrenBarn

As usual, "empowering" the FTC to issue fines, or even allowing private suits, is ineffective on its own. The fines need to be required , their levels set by law in a manner proportional to the size of the companies involved, and it needs to be made clear that there is no statute of limitations and that all growth built on ill-gotten gains from past surveillance will (not can) be rolled back when the hammer finally drops. That means, e.g., if you start using surveillance pricing in 2016 and you get caught for it in 2026, everything your company (and its executives and board members) gained in the interim will be rolled back. Current conceptions of punishment for these types of things are simply way too low. The entire tree that has grown from these kinds of activities must be pulled out from the root to adequately deter potential malefactors.

bigiain

"In 2012, Orbitz infamously displayed more expensive hotel offers to Mac users on the assumption that they were less price-sensitive." I was doing that in the late 90s. Not marking up prices, but displaying higher priced hotels at the top of search returns. It was surprisingly effective when we compared aggregated per night rates between Mac and Windows users (as identified by user-agent).

wg0

Few years ago, recruiter at a very well known retailer was on phone with me for a Python backend role. I asked him how many people were on my team that I'm going to join. He told me some 80 developers. Bit surprised and thinking probably recruiter is too noob and quoting me the size of the development team, I asked him again that no, I'm interested in knowing my team size. He instead corrected me saying that he's not talking about whole engineering team, he's talking about the pricing team that is a sub team inside the data science team and I'll be joining the pricing team that alone has 80 developers.