Drip pricing and its regulation: Experimental evidence

Rasch, Alexander; Thöne, Miriam; Wenzel, Tobias

doi:10.1016/j.jebo.2020.04.007

Cited by 13 publications

(11 citation statements)

References 41 publications

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“…Furthermore, children have been shown to be particularly prone to be affected by dark patterns in advertising in apps (Meyer et al, 2019[137]) and in the design of loot boxes in online games (Forbrukerrådet, 2022[89]), particularly where they incentivise spending and personal data sharing (Bell and Fitton, 2021 [138]). Radesky et al (2022 [58]) furthermore found children of families of low socio-economic status were more likely to encounter manipulative design features in children's apps.…”

Section: Consumer Vulnerability To Dark Patternsmentioning

confidence: 99%

Dark commercial patterns

2022

OECD Digital Economy Papers

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There is mounting concern that dark commercial patterns may cause substantial consumer detriment. These practices, which are commonly found in online user interfaces, steer, deceive, coerce, or manipulate consumers into making choices that often are not in their best interests. In light of the growing need to address dark commercial patterns comprehensively, the OECD Committee on Consumer Policy first held a roundtable on the topic in November 2020 (OECD, 2021[9]). This report builds on the roundtable discussion, in particular by proposing a working definition of dark commercial patterns, setting out evidence of their prevalence and harms, and identifying possible policy and enforcement responses to assist consumer policy makers and authorities in addressing them. It also documents possible approaches consumers and businesses may take to mitigate dark commercial patterns.The report was prepared by Nicholas McSpedden-Brown, under the supervision of Brigitte Acoca of the OECD Secretariat and in consultation with the Committee on Consumer Policy's advisory group on dark commercial patterns. It was approved and declassified by written procedure by the Committee on Consumer Policy on 24 August 2022 and prepared for publication by the OECD Secretariat.

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Section: Consumer Vulnerability To Dark Patternsmentioning

confidence: 99%

Dark commercial patterns

2022

OECD Digital Economy Papers

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“…The customer can be engaged in a purchasing process by attractive features such as low pricing, which leads to a surprise when the total price is discovered. Spending time on subsequent pages will prevent her from remembering the competition's price or prevent her from starting the search process from the beginning [38].…”

Section: Consumer's Behavior Manipulationmentioning

confidence: 99%

Artificial intelligence and consumer manipulations: from consumer's counter algorithms to firm's self-regulation tools

Marcellis-Warin

Marty

Thelisson³

et al. 2022

AI Ethics

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The growing use of artificial intelligence (A.I.) algorithms in businesses raises regulators' concerns about consumer protection. While pricing and recommendation algorithms have undeniable consumer-friendly effects, they can also be detrimental to them through, for instance, the implementation of dark patterns. These correspond to algorithms aiming to alter consumers' freedom of choice or manipulate their decisions. While the latter is hardly new, A.I. offers significant possibilities for enhancing them, altering consumers' freedom of choice and manipulating their decisions. Consumer protection comes up against several pitfalls. Sanctioning manipulation is even more difficult because the damage may be diffuse and not easy to detect. Symmetrically, both ex-ante regulation and requirements for algorithmic transparency may be insufficient, if not counterproductive. On the one hand, possible solutions can be found in counter-algorithms that consumers can use. On the other hand, in the development of a compliance logic and, more particularly, in tools that allow companies to self-assess the risks induced by their algorithms. Such an approach echoes the one developed in corporate social and environmental responsibility. This contribution shows how self-regulatory and compliance schemes used in these areas can inspire regulatory schemes for addressing the ethical risks of restricting and manipulating consumer choice.

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“…Most of the legal debate internalizes a demand approach, centred on eliciting consumers' response to specific practices (Huck & Wallace, 2015), thereby limiting the scope of the analysis. Industrial economists have paid more attention to the supply side, studying the consequences of the use of shrouding and complexity as anti-competitive tools (Kalayci & Potters, 2011;Gu & Wenzel, 2015Kalaycı, 2016;Crosetto & Gaudeul, 2017;Normann & Wenzel, 2019;Rasch et al, 2020). However, this body of literature continues to overlook the endogenous choice of practices from a menu of options (instead of a simple extensive margin) and misleading use (instead of simple adoption).…”

Section: Policy Background and Related Literaturementioning

confidence: 99%

“…The transaction test in the US is interpreted as the inducement of a net loss, that is, the benefits do not adequately compensate the buyer for the price paid (Luguri & Stahilevitz, 2021). endogenous choice of options is the paucity of proposed protective measures, which are usually limited to either prohibition (Rasch et al, 2020) or increasing market entry (Kalaycı, 2016).…”

Section: Policy Background and Related Literaturementioning

confidence: 99%

Unfair commercial practices in a pit market: evidence from an artefactual field experiment

Bogliacino

Charris

Codagnone

et al. 2022

Behav. Public Policy

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Commercial practices such as drip pricing, reference pricing and best-price guarantee can be used to set higher prices and mislead consumers, but protective measures can restore efficiency. In a placebo-controlled market experiment, we examined a treatment allowing for the use and misuse of commercial practices. Three additional treatments tested the effects of formal sanctions, informal sanctions and a regret nudge. We found that commercial practices led to higher prices, cheating was systematic and regret nudging was ineffective. Furthermore, formal and informal sanctions reduced both the likelihood of using commercial practices and the likelihood of cheating, leading to welfare increases.

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Drip pricing and its regulation: Experimental evidence

Cited by 13 publications

References 41 publications

Dark commercial patterns

Dark commercial patterns

Artificial intelligence and consumer manipulations: from consumer's counter algorithms to firm's self-regulation tools

Unfair commercial practices in a pit market: evidence from an artefactual field experiment

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