"Surveillance pricing has dominated headlines recently. Delta Air Lines' announcement that it will use artificial intelligence to set individualized ticket prices has led to widespread concerns about companies using personal data to charge different prices for identical products. As The New York Times reported, this practice involves companies tracking everything from your hotel bookings to your browsing history to determine what you're willing to pay."
"The reaction has been swift. Democratic lawmakers have responded with outrage, with Texas Representative Greg Casar introducing legislation to ban the practice. Meanwhile, President Donald Trump's new chair of the Federal Trade Commission has shut down public comment on the issue, signaling that the regulatory pendulum may swing away from oversight entirely. What's missing in this political back-and-forth is a deeper look at the economics."
Surveillance pricing sets individualized prices using personal data such as browsing history, location, purchase patterns, and device type. It differs from traditional dynamic pricing by tailoring prices to each customer's predicted reservation price rather than raising prices for everyone during peak demand. Modern data collection has made estimating reservation prices increasingly feasible. An FTC investigation found companies track highly personal behaviors to set individualized prices. Political reactions include proposed legislative bans and regulatory decisions that may reduce public input. Economic arguments suggest surveillance pricing can increase market efficiency and, in some cases, equity, while creating significant privacy and fairness challenges.
Read at Fast Company
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