Friday, June 29, 2012

perfect price discrimination and social networking

Safeway is moving towards perfect price discrimination (well, we already knew that... we already get personalized coupons when we check out) through a personalized rewards program.

A "problem" with social networking being the foundation of everything on the web is that retailers have so much information about customers that perfect price discrimination is much more feasible.* That's not to say that price discrimination is inherently a bad thing, on net for society or for individuals, but it can be for individuals in individual instances: I like getting discounts for being me but I want to be able to hide who I am in the cases when retailers want to charge me more than other people. If everything I do online is associated with my identity, through facebook or google or amazon, it's a lot harder to switch to anonymity.**

This makes me wonder if amazon prime a long-term tactic to aggregate personal information for price discrimination purposes? Amazon toyed with individualized prices awhile ago but people were so offended that they stopped. But I'm sure they're tempted to keep trying, in less offensive ways. Individualized discounts can't be offensive, can they? But then, when everyone has their own price, what is the base price that the discount is relative to? They can declare it to be whatever they want, just as safeway posts "regular non-member prices" that are meaningless except to make people feel like they are getting a good deal (and to coerce everyone to be a member of course).

In the case of safeway, everyone is a member in order to get the good prices. In the case of amazon, everyone has/uses their amazon prime account in order to get free fast shipping. That allows amazon to charge more for prime customers who will still prefer (or are oblivious to the other option) to pay the higher individualized price than to pay for slower shipping.

Is this already happening perhaps? It tells you something that I don't even know, because I only shop on amazon within my account... If so, how are they framing it so as not to be objectionable?

*I'm trying really hard here to avoid balking at social networking-based price discrimination purely for being creepy and unfair, because what is 'unfair' depends on framing effects (see above on individualized discounts.) and 'creepiness' is an evolving, subjective thing. So, work with me; compartmentalize these things for the duration of this blog post :)

**There seems to be a trend in people using multiple web browsers for this purpose; one stays logged into things and the other doesn't. Also, non-tracking search sites like duckduckgo.

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