Study: Online pricing is secretly discriminatory
A study from Northeastern University found discriminatory pricing on e-commerce sites to be more widespread than thought. But rather than concerns about charging different prices for the same items or steering some users toward higher-price items, the researchers only found the lack of transparency a problem.
Conducted this spring, experiences on 16 popular retail and travel e-commerce sites were tracked by conducting searches on a personal laptop or smartphone while doing the identical queries at the exact same time from clean accounts devoid of cookies and search and purchase history.
Most of the experiments did not reveal evidence of price steering or price discrimination, but the price differences were significant in some of the cases.
Among the findings from the study:
- Of the 16, four general retailers and five travel sites showed some evidence of personalization, including cases where sites altered prices by hundreds of dollars.
- Cheaptickets and Orbitz offered reduced prices on hotels to "members."
- Expedia and Hotels.com steered a subset of users toward more expensive hotels.
- Home Depot and Travelocity showed different prices for those searching on mobile devices versus desktop computers.
Price discrimination is not "an inherently sinister ploy," according to the study. Senior, student and military discounts as well as coupons are technically forms of price discrimination. The problem is that the algorithm-driven online price/search differentials aren’t obvious or clearly posted.
"In the real world, there are coupons and loyalty cards, and people are fine with that," Christo Wilson, an assistant professor at Northeastern, told the Wall Street Journal. "Here, there’s a transparency problem. The algorithms change regularly, so you don’t know if other people are getting the same results."
The researchers also stressed that the discrimination may be unintentional but a side effect of the web’s personalization algorithms.
"It’s probably the sort of thing the general public isn’t conscious of," Justin Borgman, chief executive of Cambridge big data firm Hadapt, told The Boston Globe. "You could argue it’s one of darker sides of what big data can do for you."
- Study: some online shoppers pay more than others – Northeastern University
- Online retailers found to shift offerings and prices – The Boston Globe (tiered sub.)
- Why You Can’t Trust You’re Getting the Best Deal Online – The Wall Street Journal (sub. required)
Do you expect an eventual public outcry over the need for greater transparency around customized pricing on the web? Do you see price discrimination as one of the “darker sides” of big data?