Week 1: Preliminary Research

Ethics. We don’t have one singular definition because it varies based on the situation. So what would the definition be when applied to dynamic pricing? Hello, and welcome back to my Senior Project Blog! This week was quite exciting as I started a lot of my preliminary research and developed some new questions to look at. During the beginning of the week, I researched some courses and decided to audit a Coursera course called Pricing Strategy in Practice in order to supplement my understanding of pricing strategies and how they work. I also started tentatively outlining the types of people that I want to get to interview as well as send out surveys to. In the second part of the week I continued my literature review.

As I mentioned in my Week 0 blog post the biggest difference between the usage of dynamic pricing for concerts and airplane tickets is scarcity. When buying tickets for concerts, which I am sure many of you have done before, you tend to get more invested in getting onto the website as soon as they become available or you will get more worked up about the prices or even the inability to purchase a ticket. But when we turn to look at buying tickets for a plane, you don’t tend to see these kinds of reactions as often. This is because there are more than two or three nights that you can get that plane. There are multiple. But the lack of these reactions is also connected to the idea of transparency. Consumers tend to not understand how or when dynamic pricing is being used and for concerts when they have these “reactions” its based on their personal biases. By completing my research I hope to help consumers understand what is and isn’t dynamic pricing so that they can make more informed decisions. 

This is when ethics also comes in. Ethics is really hard to define because it is such a spectrum. But we can start by talking about the feeling of “fairness”. It feels unfair when you, as a lifelong fan of an artist, don’t get a ticket to a concert because the prices are out of your budget, or when the tickets all get bought by people who can pay the high prices of them, but haven’t had the same commitment as you to the artist. So in your head that may seem unfair but to the people who bought the tickets it might seem fair because they have the money to be able buy the ticket. This is why we can’t use just one person’s definition of fair or unfair because then it becomes skewed. We have to combine multiple definitions and in the case of my project connect it to the usage of dynamic pricing for concerts and airlines. This is why I plan to continue to do my literature review and then supplement it with interviews and surveys to get a balanced definition.

Though I am still early on in my research my biggest concern about dynamic pricing is the “Lack of transparency about the prices charged or the possible breaches of privacy involved in gathering information about each customer’s reservation price, the fact that different customers are charged different prices may suggest that those customers who have been charged the higher prices might have been exploited through having been charged an unfair price.” (Elegido, 2011, p. 634) This gives me the impression that this practice should be considered unethical.

Something that I found interesting when talking to my on-site advisor is that dynamic pricing actually has nothing to do with competition, whereas I thought it was one of the main components, but rather it is strictly used for maximising revenue and it isn’t designed to satisfy the consumer.

Overall, this week was very interesting for panning out questions to delve into during my research and I am really excited to see where it will lead me. I also think things like Wendy’s planning to start to use dynamic pricing shows that dynamic pricing is becoming more widespread and more things could potentially become dynamically priced, making my research even more valuable to the consumers who could have to get used to seeing dynamic pricing on a much more frequent basis. Thank you for continuing to read my blog, I look forward to sharing even more exciting findings with you all in the weeks to come!