A note on fairness and personalised pricing
Since the seminal papers of Fehr and Schmidt (1999) and Bolton and Ockenfels (2000), fairness has become an important discussion point in economics. Is it unfair that different people pay different prices for the same good or service? We provide what we believe to be a novel approach: We let normal...
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| Published in | Economics letters Vol. 136; pp. 179 - 183 |
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| Main Authors | , |
| Format | Journal Article |
| Language | English |
| Published |
Amsterdam
Elsevier B.V
01.11.2015
Elsevier Science Ltd |
| Subjects | |
| Online Access | Get full text |
| ISSN | 0165-1765 1873-7374 |
| DOI | 10.1016/j.econlet.2015.09.012 |
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| Abstract | Since the seminal papers of Fehr and Schmidt (1999) and Bolton and Ockenfels (2000), fairness has become an important discussion point in economics. Is it unfair that different people pay different prices for the same good or service? We provide what we believe to be a novel approach: We let normal everyday consumers play the role of sellers who have access to consumers’ data (and willingness to pay). A strong finding of behaviour in this setup is that subjects charge a fixed percentage (approximately 64%) of the willingness to pay from each of their subjects, leading to a fair, whilst uneven, distribution of prices. Interesting, this 64% price level does not change when we vary the number of sellers competing in the market. |
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| AbstractList | Since the seminal papers of Fehr and Schmidt (1999) and Bolton and Ockenfels (2000), fairness has become an important discussion point in economics. Is it unfair that different people pay different prices for the same good or service? We provide what we believe to be a novel approach: We let normal everyday consumers play the role of sellers who have access to consumers' data (and willingness to pay). A strong finding of behaviour in this setup is that subjects charge a fixed percentage (approximately 64%) of the willingness to pay from each of their subjects, leading to a fair, whilst uneven, distribution of prices. Interesting, this 64% price level does not change when we vary the number of sellers competing in the market. All rights reserved, Elsevier Since the seminal papers of Fehr and Schmidt (1999) and Bolton and Ockenfels (2000), fairness has become an important discussion point in economics. Is it unfair that different people pay different prices for the same good or service? We provide what we believe to be a novel approach: We let normal everyday consumers play the role of sellers who have access to consumers’ data (and willingness to pay). A strong finding of behaviour in this setup is that subjects charge a fixed percentage (approximately 64%) of the willingness to pay from each of their subjects, leading to a fair, whilst uneven, distribution of prices. Interesting, this 64% price level does not change when we vary the number of sellers competing in the market. Since the seminal papers of Fehr and Schmidt (1999) and Bolton and Ockenfels (2000), fairness has become an important discussion point in economics. Is it unfair that different people pay different prices for the same good or service? We provide what we believe to be a novel approach: We let normal everyday consumers play the role of sellers who have access to consumers' data (and willingness to pay). A strong finding of behaviour in this setup is that subjects charge a fixed percentage (approximately 64%) of the willingness to pay from each of their subjects, leading to a fair, whilst uneven, distribution of prices. Interesting, this 64% price level does not change when we vary the number of sellers competing in the market. [web URL: http://www.sciencedirect.com/science/article/pii/S0165176515003705] |
| Author | Vulkan, Nir Shem-Tov, Yotam |
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| Cites_doi | 10.1162/003355399556151 10.1006/game.1999.0715 10.2139/ssrn.1999757 10.1287/mnsc.1030.0151 10.1016/j.joep.2004.03.002 10.1257/aer.90.1.166 10.1287/mksc.1040.0073 10.1007/PL00020950 10.1016/j.jebo.2009.05.021 10.1111/j.0022-1821.2004.00236.x |
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| References | Montgomery, Li, Srinivasan, Liechty (br000060) 2004; 23 Abrams, Sefton, Yavas (br000005) 2000; 16 Baye, Morgan, Scholten (br000010) 2004; 52 Fehr, Schmidt (br000040) 1999 Bolton, Ockenfels (br000015) 2000; 90 Cooper, Kagel (br000020) 2009 Englmaier, Florian, Gratz, Linda, Reisinger, Markus, 2012. Price discrimination and fairness concerns. Available at SSRN 1999757. Streitfeld, David, 2000. On the web, price tags blur, Technical Report, Washington Post. Dufwenberg, Gneezy (br000025) 2000; 30 Montgomery, Hosanagar, Krishnan, Clay (br000055) 2004; 50 Fehr, Brown, Zehnder (br000035) 2009; 119 Vulkan (br000070) 2003 Fischbacher, Fong, Fehr (br000045) 2009; 72 Huang, Chang, Chen (br000050) 2005 Fehr (10.1016/j.econlet.2015.09.012_br000035) 2009; 119 Abrams (10.1016/j.econlet.2015.09.012_br000005) 2000; 16 Baye (10.1016/j.econlet.2015.09.012_br000010) 2004; 52 Montgomery (10.1016/j.econlet.2015.09.012_br000060) 2004; 23 Huang (10.1016/j.econlet.2015.09.012_br000050) 2005 Fischbacher (10.1016/j.econlet.2015.09.012_br000045) 2009; 72 Cooper (10.1016/j.econlet.2015.09.012_br000020) 2009 Fehr (10.1016/j.econlet.2015.09.012_br000040) 1999 Montgomery (10.1016/j.econlet.2015.09.012_br000055) 2004; 50 Bolton (10.1016/j.econlet.2015.09.012_br000015) 2000; 90 10.1016/j.econlet.2015.09.012_br000030 Vulkan (10.1016/j.econlet.2015.09.012_br000070) 2003 10.1016/j.econlet.2015.09.012_br000065 Dufwenberg (10.1016/j.econlet.2015.09.012_br000025) 2000; 30 |
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| SubjectTerms | Consumer behavior Consumer behaviour Consumers Fair Pricing Fairness Market design markets people Price level Price levels Prices Pricing Studies Willingness to pay |
| Title | A note on fairness and personalised pricing |
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