Confusopoly: competition and obfuscation in markets

Kalaycı, Kenan

doi:10.1007/s10683-015-9438-z

Cited by 19 publications

(10 citation statements)

References 19 publications

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“…Lastly, price framing is a decisive element whether a price is perceived as fair or not. Several authors demonstrate that firms can successfully counter peer-induced fairness concerns by obfuscating prices to impede interpersonal comparisons and to raise the chances that consumers accept the prices offered (Allender et al 2016;Gu and Wenzel 2014;Kalaycı 2016). In this manner, personalized prices can be framed as explicit personal offerings, such as exclusive deals and are therefore more likely to be accepted (Barone and Roy 2010).…”

Section: Personalized Pricingmentioning

confidence: 99%

Mapping the Ethicality of Algorithmic Pricing: A Review of Dynamic and Personalized Pricing

et al. 2019

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Firms increasingly deploy algorithmic pricing approaches to determine what to charge for their goods and services. Algorithmic pricing can discriminate prices both dynamically over time and personally depending on individual consumer information. Although legal, the ethicality of such approaches needs to be examined as often they trigger moral concerns and sometimes outrage. In this research paper, we provide an overview and discussion of the ethical challenges germane to algorithmic pricing. As a basis for our discussion, we perform a systematic interpretative review of 315 related articles on dynamic and personalized pricing as well as pricing algorithms in general. We then use this review to define the term algorithmic pricing and map its key elements at the micro-, meso-, and macro levels from a business and marketing ethics perspective. Thus, we can identify morally ambivalent topics that call for deeper exploration by future research.

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Section: Personalized Pricingmentioning

confidence: 99%

Mapping the Ethicality of Algorithmic Pricing: A Review of Dynamic and Personalized Pricing

et al. 2019

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“…In Shchepetova (2012), market with more firms exhibit higher product complexity and higher prices. However, in Kalaycı (2015a), increasing the number of firms does not increase the complexity of offers.…”

Section: Literaturementioning

confidence: 99%

Choosing not to compete: Can firms maintain high prices by confusing consumers?

Crosetto

Gaudeul

2017

Economics Manag Strategy

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Firms with very similar products often present their products in different ways. This makes it difficult for consumers to find out which product fits their needs best, or which one is the cheapest. Why is there no convergence toward common ways to present products? Is it possible for firms to maintain high prices by confusing consumers? We run a market experiment to investigate those questions. In our market, firms choose how to present their products in addition to choosing their price. We find that firms maintain different ways to present their products and that this allows them to maintain high prices. This behavior is not consistent with competitive behavior, such as when firms adopt best responses to each other, imitate the most successful firm, or learn the best strategy over time. Rather, our results are only consistent with cooperation between firms. Firms cooperate by not imitating the way other firms present their products. Cooperation is maintained by the threat of tough competition if a firm makes its product easy to compare with others. Firms are all the more likely to maintain such cooperation if their products do not actually differ much. This is because in that case, maintaining differences in the presentation of their products is the only way to maintain profits.

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“…1 It is well known in industrial organization that the existence of search costs to compare prices allows firms to eschew the pressure from competition and to charge prices above the competitive market price (Diamond, 1971). With informational search cost, companies may free themselves from the pressure of market competition and instead benefit from a 'confusopoly': a situation where confused consumers struggle to compare companies' products and end up paying more (or getting lower-quality products) than under transparent market competition (Kalaycı, 2016). In his study of health insurance products in the USA, Jin (2005) found evidence that such a strategy was actively followed by firms.…”

Section: Competition With Informed Customers Versus Confusopolymentioning

confidence: 99%

Disclosure for real humans

Page

2019

Behav. Public Policy

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Modern consumers typically face complex goods and services. In the interest of customer protection, these companies are asked to disclose information about the products and consumers are typically required to indicate their understanding of the information provided. In truth, consumers seldom consult, even less understand the information provided. I present here the state of evidence about how commercial disclosure actually works (or rather does not work) with consumers characterized with human limitations in information processing. I discuss ways to improve disclosure regulation to improve customer protection.

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Confusopoly: competition and obfuscation in markets

Cited by 19 publications

References 19 publications

Mapping the Ethicality of Algorithmic Pricing: A Review of Dynamic and Personalized Pricing

Mapping the Ethicality of Algorithmic Pricing: A Review of Dynamic and Personalized Pricing

Choosing not to compete: Can firms maintain high prices by confusing consumers?

Disclosure for real humans

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