I agree with the paper's conclusions. Dynamic pricing is a good thing. But lets take a counterexample:
Amazon tried this years ago. They changed pricing on the same sku based on who was shopping for it.
The blowback was tremendous. Amazon had to actually back down.
My take is that consumers understand and are willing to put up with dynamic pricing for airplane seats because the algorithm is presumably understood.
I'm willing to accept that the person sitting next to me on an airplane may have paid 1/3 than the price I paid on my ticket. Maybe the person next to me booked earlier, or booked when the airline had a promo going. Sounds reasonable.
But what happens when airlines quietly change algos...to raise prices because of my browsing habits, IP, or CC used?
Amazon tried this years ago. They changed pricing on the same sku based on who was shopping for it.
The blowback was tremendous. Amazon had to actually back down.
My take is that consumers understand and are willing to put up with dynamic pricing for airplane seats because the algorithm is presumably understood.
I'm willing to accept that the person sitting next to me on an airplane may have paid 1/3 than the price I paid on my ticket. Maybe the person next to me booked earlier, or booked when the airline had a promo going. Sounds reasonable.
But what happens when airlines quietly change algos...to raise prices because of my browsing habits, IP, or CC used?
I bet you this is coming