Designing Algorithmic Dynamic Pricing from an Ethical Perspective

Online dynamic pricing (ODP) strategy consists in using algorithmic power to implement frequent price adjustments depending on factors such as demand level, connection location, moment of purchase, market conditions, or consumer profile. The purpose of this article is to investigate ethical perception of different parameters that can be used by firms for setting the ODP algorithm. Our analysis is based on an online survey of 558 French web users, which provided information about their ethical perception of 18 possible ODP parameters. Our empirical investigation allows to distinguish the parameters perceived as ethical and unethical by consumers. We identify different intensities of ethical perception and three categories of parameters with differentiated impact on the global ethical perception of ODP. This article provides both a method and a framework for practitioners to make a classification of ODP parameters, taking into account consumer ethical perception.