In the News
Outrage erupted against Instacart after new pricing practices were exposed, impacting families’ weekly grocery bill.
This situation highlights an economic practice used for decades called price discrimination, charging customers different prices for identical products based on perceived willingness to pay: the most someone is willing to pay before they choose to not buy it. The practice often helps out consumer groups with a lower willingness to pay. For example, at movie theaters, ticket prices for seniors and children are often lower than those for adults.
Here’s Our Take
Consumer data often informs a company’s decision to create a pricing structure like this. Consumers with fixed incomes, such as seniors and children, will be less willing to buy certain goods, such as movie tickets. Instacart, however, uses technology to adjust prices across individual customers, though this is said to be random and not based on past shopping habits.
While the news highlights AI contributing to these changes, innovation is not the enemy. Consumers gain significant value from using technology to shop. Online tools can find the best flash sales, the optimal product for your needs, and product combinations that fit a specific budget. And not to mention, customers can still visit stores directly, online or in-person, to compare prices with this service.
Closing
While some lawmakers may be inclined to use this situation as a reason to restrict AI, that would be the wrong path. Coexistence among innovation, transparency, and consumer privacy can and should be achieved in the market, not through government intervention.
