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Ethical and legal considerations of artificial intelligence and algorithmic decision-making in personalized pricing

Author

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  • Joshua A. Gerlick

    (Case Western Reserve University)

  • Stephan M. Liozu

    (Case Western Reserve University)

Abstract

The extent to which pricing executives consider consumer perceptions of deception, fairness, and social justice is positioned within an emerging area of research that triangulates the dynamic between legal constraints, ethical considerations, and algorithmic models to make pricing decisions. This paper builds a conceptual model from an analysis of literature describing how companies couple organizational and technology factors into the price-setting process. The legal frameworks of antitrust, data privacy, and antidiscrimination are tethered to the ethical frameworks of deception, fairness, and social justice to form a foundation of relevant organizational factors. A qualitative study is proposed to test the validity of the conceptual model. The primary contribution of this paper is to catalyze practitioner discussion and spur empirical research into the implications of personalized pricing using algorithmic models.

Suggested Citation

  • Joshua A. Gerlick & Stephan M. Liozu, 2020. "Ethical and legal considerations of artificial intelligence and algorithmic decision-making in personalized pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(2), pages 85-98, April.
  • Handle: RePEc:pal:jorapm:v:19:y:2020:i:2:d:10.1057_s41272-019-00225-2
    DOI: 10.1057/s41272-019-00225-2
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    Cited by:

    1. Maxime C. Cohen & Adam N. Elmachtoub & Xiao Lei, 2022. "Price Discrimination with Fairness Constraints," Management Science, INFORMS, vol. 68(12), pages 8536-8552, December.
    2. Tomczyk, Arkadiusz T. & Buhalis, Dimitrios & Fan, Daisy X.F. & Williams, Nigel L., 2022. "Price-personalization: Customer typology based on hospitality business," Journal of Business Research, Elsevier, vol. 147(C), pages 462-476.
    3. George Lăzăroiu & Luminița Ionescu & Cristian Uță & Iulian Hurloiu & Mihai Andronie & Irina Dijmărescu, 2020. "Environmentally Responsible Behavior and Sustainability Policy Adoption in Green Public Procurement," Sustainability, MDPI, vol. 12(5), pages 1-12, March.
    4. Violeta Sima & Ileana Georgiana Gheorghe & Jonel Subić & Dumitru Nancu, 2020. "Influences of the Industry 4.0 Revolution on the Human Capital Development and Consumer Behavior: A Systematic Review," Sustainability, MDPI, vol. 12(10), pages 1-28, May.
    5. Nunan, Daniel & Di Domenico, MariaLaura, 2022. "Value creation in an algorithmic world: Towards an ethics of dynamic pricing," Journal of Business Research, Elsevier, vol. 150(C), pages 451-460.
    6. Renzhe Xu & Xingxuan Zhang & Peng Cui & Bo Li & Zheyan Shen & Jiazheng Xu, 2022. "Regulatory Instruments for Fair Personalized Pricing," Papers 2202.04245, arXiv.org, revised Feb 2022.
    7. Ionut Anica-Popa & Liana Anica-Popa & Cristina Radulescu & Marinela Vrincianu, 2021. "The Integration of Artificial Intelligence in Retail: Benefits, Challenges and a Dedicated Conceptual Framework," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(56), pages 120-120, February.

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