CORE Brown Bag Seminar - Jing Su

Jing Su

(CORE)

invited by ...

will give a presentation on :

Consumer fairness concerns for personalized pricing by two-sided platforms

Abstract :

Online platforms can track consumers’ behaviors to infer their willingness-to-pay and extract profits by offering personalized prices. Ideally, consumers’ fairness concern may restrict online platforms’ incentives to exert such price discrimination. However, in practice, online platforms have distinct attitudes toward consumers’ fairness concerns. To understand the mechanism underlying the phenomenon, I set up a configuration for a two-sided monopolistic platform between suppliers and two types of consumers with fairness concerns. Based on this configuration, I characterize the condition under which the platform exerts price discrimination according to consumers’ willingness-to-pay and specify how consumers’ fairness concerns interact with the platform’s discriminatory pricing given the two-sided structure. The results suggest that: (i) a monopolistic platform will exert price discrimination according to consumers’ willingness-to-pay if consumers’ aversion to being unfairly treated by the platform in terms of pricing is not strong enough in relation to their stickiness to the platform; and (ii) a monopolistic platform faces a fairness concerns-contingent trade-off between extracting more profits from consumers whose willingness-to-pay is stronger than other consumers and extracting more profits from the supplier side.