University Team Examines Effect of Personalization on Prices in E-Commerce

Nov. 3, 2014

University Team Examines Effect of Personalization on Prices in E-Commerce A team of researchers at Northeastern University in Boston has found that the proliferation of personalization by e-commerce sites has resulted in different consumers using different devices being presented with different prices or products for the same search, many times to their disadvantage. The team contends that the opaque nature of the algorithms used to manipulate search results or customize prices without the user’s knowledge results in some online shoppers paying more than others for the same thing. The team examined 16 e-commerce sites in different verticals such as retail, travel and car rental and found some evidence of “price steering” (when the order of search results is customized to the user) or “price discrimination” (when a product’s price is customized to the user) on nine of them. In a few of the cases, the price difference based on personalization was “hundreds of dollars.”

The research paper details how the team determined if the effects were present. According to an interview on Northeastern’s Website, Christo Wilson, assistant professor at Northeastern’s College of Computer and Information Science, said the team does not pass judgment on whether the practices are good or bad and said price discrimination isn’t “an inherently sinister ploy to take advantage of people. The key factor is whether these practices are transparent. In most cases, discounts for select groups of people are clearly posted and widely understood, but the Northeastern researchers said such behavior is much harder to detect on e-​​commerce sites.”