A note on fairness and personalised pricing

Vulkan, Nir and Yotam, Shem-Tov (2015) A note on fairness and personalised pricing. Economics Letters, 136. pp. 179-183.


Since the seminal papers of Fehr and Schmidt (1999) and Bolton and Ockenfels (2000), fairness has become an important discussion point in economics. Is it unfair that different people pay different prices for the same good or service? We provide what we believe to be a novel approach: We let normal everyday consumers play the role of sellers who have access to consumers’ data (and willingness to pay). A strong finding of behaviour in this setup is that subjects charge a fixed percentage (approximately 64%) of the willingness to pay from each of their subjects, leading to a fair, whilst uneven, distribution of prices. Interesting, this 64% price level does not change when we vary the number of sellers competing in the market.

Item Type: Article
Date Deposited: 18 Sep 2018 14:36
Last Modified: 18 Sep 2018 14:36
URI: http://eureka.sbs.ox.ac.uk/id/eprint/6901

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