Dynamic Pricing - Ethics

[Winner's Curse]

Constraints to Dynamic Pricing - Ethics of Dynamic Pricing

Winner's Curse

Prof. Richard Freeman, co-director of the Centre for Economic Performance at the London School of Economics and Harvard professor, is looking at users behaviour within auctions (ref.). He warns that users often get over excited and bid too high. He is conducting an e-mail survey of winners to see if they feel that they have made a good bargain or whether they suffer from what is known as the winner's curse. Whilst many sellers are achieving high sales prices with auctions, in the long run, it is important that they have a good reputation and repeat business.

• In Christmas 2000, Sony Playstations were being sold at auctions for inflated prices yet High Street stores were selling them at reasonable prices. (ref.)
• In the US, Fairmarket sends near loosers an e-mail offering them similar goods at a different price to the winning bid. In one trial the company sold $11,500 worth of goods from 46 e-mails. (ref.)

Ethical Pricing Research

In conjunction with Sans Prix of Australia, we have launched a new research project into Ethical Pricing. The project is looking at the acceptability of pricing tactics and practices. Managing Change is particularly interested in the increasing use of dynamic pricing including Yield Management. There is a survey with a Prize Draw of an Amazon Gift Certificate.

Viral Dynamic Pricing Survey

Have you tried our Dynamic Pricing Survey? It seeks to discover if Amazon is using your on-line behaviour to offer you a personalised price. The survey takes less than a minute and after participating you can see the results so far.

Next is Knowledge

JS 

External Resources
 

1. Davis, Gylnn, Clicking once... Clicking twice, Sunday Business Magazine, 12 August 2001
2. Freeman, Richard, 2001 (to be published), What are the Dynamics of Participating and Staying in Auctions?, Centre for Economic Performance, London School of Economics
3. See the full list of resources for this web site for other related resources.

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