DataFramed #257 Can You Use AI-Driven Pricing Ethically? with Jose Mendoza, Academic Director & Clinical Associate Professor at NYU
Nov 1, 2024
Dr. Jose Mendoza, Academic Director and Clinical Associate Professor at NYU, dives into the ethical complexities of AI-driven pricing. He discusses the tension between personalization and privacy, emphasizing consumer trust and transparency. The conversation unveils the challenges companies face in avoiding bias and ensuring fairness, especially in crisis-driven pricing. Mendoza underscores the importance of ethical guardrails in dynamic pricing models and advocates for clear communication to build lasting customer relationships.
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Dynamic Pricing Examples
- Hotels and airlines use dynamic pricing based on capacity, demand, and events.
- Uber/Lyft use surge pricing, while Amazon adjusts prices every 10 minutes based on various factors.
Ethical Pricing
- Ethical pricing benefits both buyer and seller. Price discrimination is acceptable for discounts (e.g., children, seniors) but not increases.
Starting Dynamic Pricing
- Start with dynamic pricing on key value items/categories.
- Use simple variables like inventory or demand to begin, then gradually increase complexity.