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Comment by cyberax | Hacker News Reader

Why would a dynamic price be any less fair?

E.g. I'm using a per-mile car insurance policy with a device that monitors my behavior. I'm a conservative driver, so I save a lot of money. But if such systems become universal, stupid speeders will get heavily penalized because they won't be able to offload their risks onto everyone else.

So on the one hand, it's more fair to careful drivers. But on the other hand, it will logically remove all the "slack" in the system, which serves as a de-facto social safety net.

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Per-mile insurance is just usage-based pricing, no different from per-gallon water or per-pound potatoes. That's not normally what people consider to be dynamic pricing.

Where it becomes a problem is when the price starts being set based on aspects of the would-be purchaser that have nothing to do with the actual product, and are solely there to evaluate your willingness to pay. Charge me twice as much because I'm buying twice as many potatoes? Of course, that's how prices work. Charge me twice as much because you've purchased a detailed psychological profile based on tracking my internet activity and that profile says I really like potatoes and I'm willing to pay extra for them? No, straight to jail.

In my example, the price actually depends on _how_ I drive (speeding, use of turn signals, etc.), so it fits.

> Charge me twice as much because I'm buying twice as many potatoes? Of course, that's how prices work. Charge me twice as much because you've purchased a detailed psychological profile based on tracking my internet activity and that profile says I really like potatoes and I'm willing to pay extra for them?

This really makes no sense. If you raise the price of potatoes on me, I'll just go to someone else. Competition still exists, after all.

More realistically, you'll raise the prices by a couple of percent for potatoes for me so I won't notice that. This is more insidious, but it also is self-limiting in scope.

I guess the key here is that there's only so much information that _people_ can track. For example, I don't really care about the price of Sensodyne toothpaste that I always buy, so a store can sneakily add a dollar or two to the price.

But hey, there are AI agents for that!

That's still usage-based pricing, because the cost of providing insurance is based on your risk. You cost them more (on average, probabilistically) -> they charge you more.

The objectionable stuff would be something like giving you a higher quote because the know you buy Tom Clancy novels, not because Clancy readers are riskier, but because Clancy readers shop around less and are willing to pay more.

If you're the sort who would buy potatoes from a competitor if the price went up, they won't charge you more. Willingness to switch to a competitor will be a big part of the pricing algorithm.

Fair would mean everyone gets the same price or that it’s based on somewhat transparent factors, especially when those factors have no impact on the seller. But in many of these cases, it is not disclosed at all and we have no idea what factors they are using.

Compare that to car insurance where many of the factors are well known and have a clear impact on risk.

Car insurance is a terrible example to use, drivers and cars are not fungible. The risk of insuring a driver and/or vehicle has a lot of variance.

Do you want Amazon charging you twice as much for a product as someone that has half as much disposable income because they’ve determined you can afford to pay more for the exact same physical item?

Sure. I'll just switch to someone else. I don't want the government regulating the way Amazon sets the prices.

The parts that I _do_ want to be regulated are the requirements that Amazon puts on its merchants.

Every retailer you switch to also notices your buying power and charges you twice as much. Now what?

I switch to a retailer that only charges 1.5x, and then the other retailers start competing at 1.2x, and eventually 0.9x.

Airlane fares are a good example. They are pretty much opaque, yet with robust competition the airlines can't all raise prices.

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