On the Ethics of Personalized Pricing: Habermasian Account of Transparency and Participation in Price Discrimination
(A2019-9545)

AUTHORS

Melanie Clegg, University of Lucerne; Reto Hofstetter, University of Lucerne; Peter Seele, Università della Svizzera italiana

KEYWORDS

personalized pricing; discourse ethics; transparency

ABSTRACT

With the advent of new data protection regulations, firms need to obtain consent from customers about the collection of their data for the purpose of personalizing pricing. This complies with the Habermasian concept of discourse ethics and his claim for transparency. However, we argue that transparency is not beneficial for companies, if it uncovers business strategies that discriminate customers’ prices without providing the opportunity to participate, i.e., to influence the pricing procedure. We postulate that being transparent about such a pricing procedure fosters moral anger and decreases the likelihood to obtain customers’ consent for this strategy. Within four experiments we find a negative effect of transparency on consent likelihood mediated by a moral anger emotion (experiment 1) and identify boundaries of the negative transparency effect (experiment 2, 3 and 4). Our results support e-tailers’ interest in implementing online pricing tactics in ethically acceptable ways.