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RE: Dynamic Pricing: Using AI To Manipulate The Customer
I'm not too sure, I feel like personally if I was getting a higher rate, I simply would not buy it (assuming I could figure out that others were getting a better deal through information sharing websites, which is bound to pop up concerning dynamic pricing). The other big example that already happens is in scalping, where some people want a product, (almost) no matter what! In that case, they have no problem with it, but there is market inefficiency where middle men are taking a cut. Should that be going to the producer instead? Dynamic pricing might help there too...
I feel that most people that would seek out rates through information sharing websites would not be getting the higher rates (unless their model / AI was broken). Some of the rationale is to lower the price to people who wouldn't normally buy things. As in video games, there are people who pre-order without regard to the quality of the game. These are more likely to be the people targeted by rate hikes. Thus, when a DLC comes out, they may offer it for $25 to die hard fan who pre-ordered it versus $20 to someone who bought the game after the release and regularly pays the game.
In all honestly, these differences are more likely to be more subtle and the more educated the populace are, the less likely they are to get ripped off. Unfortunately today, people regularly get ripped off.
With regards to scalping, that is a good example of dynamic pricing, although today you aren't discriminating based on user preference, rather on time. Scalpers are simply adjusting to demand. It may seem a little unfair, but at the end of the day, Person A and Person B are going to get the same initial offer for a ticket given the same time and same circumstances.
In terms of using dynamic pricing to prevent ticket scalping, you don't really need AI, but can impose a penalty for additional tickets purchased within a certain time window by a certain entity. Which in itself is a interesting idea.
Hmm, I see, this is about even further customizing the price on top of the temporal and environmental factors and looking at individual factors. That seems likely to raise the issue of inadvertently discriminatory pricing based on gender, race, etc? :)
I'd say with the current laws this could come into conflict.
I definitely could see how an model could inadvertently learn to discriminate on gender and race (as some marketing is targeted to some demographics). But if there is no explicit discrimination (using gender and race as attributes in your model) I would imagine that it would be hard to make a legal case against the companies.
For the most part, however, I think the models will mainly focus on spending habits and purchasing behaviors.