Personalized Pricing and Consumer Welfare

• 成果类型: Article; Early Access
• 署名作者: Dube, Jean-Pierre; Misra, Sanjog
• 署名单位: University of Chicago; National Bureau of Economic Research; University of Chicago
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/720793
• 发表日期: 2023
• 关键词: bayesian-inference; DISCRIMINATION; likelihood; CHOICE; MODEL; selection; monopoly; BEHAVIOR; Lasso

摘要

We study the welfare implications of personalized pricing implemented with machine learning. We use data from a randomized controlled pricing field experiment to construct personalized prices and validate these in the field. We find that unexercised market power increases profit by 55%. Personalization improves expected profits by an additional 19% and by 86% relative to the nonoptimized price. While total consumer surplus declines under personalized pricing, over 60% of consumers benefit from personalization. Under some inequity-averse welfare functions, consumer welfare may even increase. Simulations reveal a nonmonotonic relationship between the granularity of data and consumer surplus under personalization.