How targeted ads and dynamic pricing can perpetuate bias, write a detailed summary on Dynamic Pricing and Bias.
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This allows businesses to maximize revenue by offering different prices to different customers for the same product or service. Show more…
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Jason Furman and Tim Simcoe, who were at the time chair of and a senior economist for President Barack Obama's Council of Economic Advisors, wrote, "Economists have studied [price discrimination] for many years, and while big data seems poised to revolutionize pricing practice, it has not altered the underlying principles. ... Those principles suggest that [price discrimination] is often good for both firms and their customers." Furman and Simcoe described "needbased financial aid for college students" as an example of price discrimination that is good for consumers. a. What do Furman and Simcoe mean by "underlying principles"? b. In what sense is need-based financial aid an example of price discrimination? Is financial aid good for both colleges and students? Briefly explain.
Pricing Strategy
Price Discrimination: Charging Different Prices for the Same Product
1. First-time subscribers to the Economist pay a lower rate than repeat subscribers. Is this a case of price discrimination? If so, of what type?2. Supermarkets frequently issue coupons that entitle consumers to a discount in selected products. Is this a form of price discrimination? What type? Empirical evidence suggests that paper towels are significantly more expensive in markets offering coupons than in markets without coupons. Is this consistent with your previous answer about price discrimination?
Jennifer S.
Some Internet retailers track whether its customers have recently visited popular price-comparison sites. Why might these retailers offer different prices to those who have and have not recently visited price-comparison sites? If different prices are offered, which group will be offered the lower price?
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