Is Your Price Personalized? Alleviating Customer Concerns with Inventory Availability Information

Can Customers Spot Price Discrimination? Firms adjust prices to match supply with demand and increasingly use customer data to personalize pricing. Consequently, customers have limited visibility into price drivers and may worry about price discrimination based on their shopping behavior. For instance, a customer with high willingness to pay may receive a high price either because the product is popular or because the price has been personalized. In “Is Your Price Personalized? Alleviating Customer Concerns with Inventory Availability Information,” A. Aflaki and Q. Zhang studied whether observed prices are sufficiently informative to signal personalization in a dynamic setting. They found that price alone cannot resolve this uncertainty, which may lead to actions that harm both firms and customers. However, a simple binary signal disclosing whether inventory is low or abundant can, under certain conditions, ease customer concerns and benefit both the firm and its customers.