More than ever, companies are able to tailor prices across people, places, and time. They do this to maximize profit, and sometimes simply to survive. We’re in a new era of supercharged price discrimination, made possible by two major scientific and technological trends. First, AI algorithms — often trained on highly detailed behavioral data — enable organizations to infer what people are willing to pay with unprecedented precision. Second, recent developments in behavioral science — often invoked with the tagline “nudge” — provide organizations greater ability to influence their customers’ behaviors.
How AI Can Help Companies Set Prices More Ethically
Algorithms should optimize for more than just profits.
March 26, 2021
Summary.
Using AI and data-driven tools, companies can change the price of a good or service based on who is buying, when they’re shopping, and myriad other factors. This power raises a question: Should ethics and societal values factor into these prices — and how? Companies should consider what they’re selling, who they’re selling to, and how they’re selling their products, and consider the range of possible impacts. Then, they should 1) get creative about reducing negative externalities, 2) reach out to stakeholders, and 3) build proactive filters into their pricing deliberations.