🤖 AI Summary
In online markets, personalized pricing leads to inequitable consumer payments and erodes bargaining power. Method: This paper proposes a decentralized fair-exchange system that leverages price dispersion to enable low-price-region consumers to act as agents for high-price-region consumers, purchasing goods on their behalf and charging a reasonable service fee—thereby ensuring mutual net gains and system self-sustainability. Contribution/Results: It introduces the first negotiation mechanism explicitly optimizing for *individual net cost minimization*. It establishes that price dispersion is both a necessary condition for system feasibility and a regulatory force that mitigates excessive personalization and enhances seller accountability. Through game-theoretic modeling, stable matching, and fairness-aware optimization, experiments demonstrate that under high price dispersion, average individual net cost decreases by 66%, and aggregate net cost by 69%, while simultaneously guaranteeing fairness and financial sustainability.
📝 Abstract
Many online marketplaces personalize prices based on consumer attributes. Since these prices are private, consumers may be unaware that they have spent more on a good than the lowest possible price, and cannot easily take action to pay less. In this paper, we introduce a fairness-centered exchange system that takes advantage of personalized pricing, while still allowing consumers to individually benefit. Our system produces a matching of consumers to promote trading; the lower-paying consumer buys the good for the higher-paying consumer for some fee. We explore various modeling choices and fairness targets to determine which schema will leave consumers best off, while also earning revenue for the system itself. We show that when consumers individually negotiate the transaction price, and our fairness objective is to minimize mean net cost, we are able to achieve the most fair outcomes. Conversely, when transaction prices are centrally set, consumers are often unwilling to transact. When price dispersion (or range) is high, the system can reduce the mean net cost to each individual by $66%$, or the mean net cost to a group by $69%$. We find that a high dispersion of original prices is necessary for our system to be viable. Higher dispersion can actually lead to decreased net price paid by consumers, and act as a check against extreme personalization, increasing seller accountability. Our results provide theoretical evidence that such a system could improve fairness for consumers while sustaining itself financially.