
Websites Vary Prices, Deals Based on Users' Information - ssclafani
http://online.wsj.com/article_email/SB10001424127887323777204578189391813881534-lMyQjAxMTAyMDIwMzEyNDMyWj.html
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csense
For a simple introduction to the economics of price discrimination from a tech
startup's point of view, Joel on Software has a great article [1] which,
although it's from 2004, is still quite relevant. That article notes:

"[Charging different people different prices for the same product] pisses the
heck off of people. People want to feel they're paying a fair price. They
don't want to think they're paying extra...it seems like customers would
rather pay $100 when everyone else is paying $100 than pay $79 if they know
there's someone out there who got it for $78."

[1]
[http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...](http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html)

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willscott
There was an academic paper on this published in the fall by Telefonica in
Spain:
[http://conferences.sigcomm.org/hotnets/2012/papers/hotnets12...](http://conferences.sigcomm.org/hotnets/2012/papers/hotnets12-final94.pdf)

Abstract:

    
    
      Price discrimination, setting the price of a given product
      for each customer individually according to his valuation
      for it, can beneﬁt from extensive information collected
      online on the customers and thus contribute to the
      proﬁtability of e-commerce services. Another way to
      discriminate among customers with different willingness to
      pay is to steer them towards different sets of products
      when they search within a product category (i.e., search
      discrimination). Our main contribution in this paper is to
      empirically demonstrate the existence of signs of both
      price and search discrimination on the Internet, and to
      uncover the information vectors used to facilitate them.
      Supported by our ﬁndings, we outline the design of a
      large-scale, distributed watchdog system that allows users
      to detect discriminatory practices.
    

The paper only has preliminary results (hotnets targets fairly early ideas),
but so far has only detected discrimination based on location and search
terms.

~~~
stfu
This begs for a follow up paper from a psychological perspective, on
psychological reaction by customers on finding out that somebody else paid a
different price based on their shopping behavior.

If there is a very price sensitive shopping behavior this will lead to a
strong increase of data noise by people trying to play the algorithms, e.g.
fake accounts, deletion of accounts, groomed accounts towards specific deals,
etc.

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kooshball
Once this becomes common place, I wonder if we will see proxy services that
runs the same item through 100 different area codes to find the one with the
cheapest results.

~~~
ChuckMcM
Oh absolutely. But there are lots of ways to figure out who you are. We had
that discussion about Formalyzer and the 42floors article, a number of sites
have it on their web pages. See <http://news.ycombinator.com/item?id=4954972>

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robryan
People will get mad at this but no one will ever reject a personal coupon in
the basis that it is unfair for other customers.

I have had customers get annoyed when they find out we are charging more on
Amazon (simply passing on the amazon fee). As a customer you will likely find
on the amazon marketplace that an seller that also sells from a website will
be doing a better price on the website. I guess in this case though the extra
price is buying you some protection as the marketplace is very customer
friendly.

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rohamg
Here's the thing- if it's based on location, social data, influence, hair
color, none of that is illegal. Two things are illegal: 1) discrimination in
the -ism sense of the word, and 2) price discrimination based on proximity to
competitors in the markets wherein the company doing the price fixing holds a
monopoly. #2 is what Staples could be running afoul of here. In the US, it's
not illegal to have a monopoly (ie be the only Staples in a small town without
an Office Depot/OfficeMax etc). It's also not illegal to engage in anti-
competitive (ie under-cutting your competition in price, signing exclusivity
contracts etc.) or anti-consumer (ie price discrimination, restriction of
choice, etc.) practices. What _IS_ illegal is engaging in anti-competitive
practices in situations where you hold a monopoly, and that's what Staples may
be in danger of doing here. And yes, I know Staples doesn't hold a monopoly
over the entire internet but the value of brand identification / trust and
convenience of in-store pickup shouldn't and won't be overlooked by
regulators.

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codeka
Isn't this the ultimate goal, though? To be able to charge people exactly what
they're willing to pay, no more, no less? The method they're using (your
geographic location) is a little crude, for sure, but surely as retailers are
able to build a better profile of their customers this is only going to happen
more often.

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benregenspan
Why are Swingline staplers perpetual objects of injustice?

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pasbesoin
How about a simplistic argument against location-based pricing? (Yes,
_simplistic_ , but sometimes such an argument serves a purpose.) You're
shopping "on the Internet", where there is no physical, "bricks and mortar"
retail outlet. [1]

At most, put real differences in shipping costs into the "shipping" portion of
the final total. (Something readily auditable.)

Anything else should get a long, hard look.

(I'd consider it akin the "redlining" in the real estate marketplace.
Geographically based, but having an outsized impact upon specific
demographic/cultural/racial groups.)

\--

[1] Certainly, in the U.S., retailers have loved to embrace precisely this
argument, from the perspective of avoiding state sales taxes.

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ozataman
How was WSJ able to connect from every US zipcode? Through tor? Something
similar?

