# Fairness, Welfare, and Equity in Personalized Pricing

arXiv: https://arxiv.org/abs/2012.11066 · HTML: https://mlsanity.com/paper/2012.11066/

## Key facts

- Cited by 17 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 21 Dec 2020.

## Built on by (most cited first, 17 of 17)

- [Exploiting Cultural Biases via Homoglyphs in Text-to-Image Synthesis](https://mlsanity.com/paper/2209.08891/) (2022)
- [Distribution-free Contextual Dynamic Pricing](https://mlsanity.com/paper/2109.07340/) (2021)
- [Algorithmic Fairness in Business Analytics: Directions for Research and Practice](https://mlsanity.com/paper/2207.10991/) (2022)
- [Fair Off-Policy Learning from Observational Data](https://mlsanity.com/paper/2303.08516/) (2023)
- [Measuring Fairness Under Unawareness of Sensitive Attributes: A Quantification-Based Approach](https://mlsanity.com/paper/2109.08549/) (2021)
- [Fairness-aware Online Price Discrimination with Nonparametric Demand Models](https://mlsanity.com/paper/2111.08221/) (2021)
- [Loss Functions for Discrete Contextual Pricing with Observational Data](https://mlsanity.com/paper/2111.09933/) (2021)
- [Fairness and Sequential Decision Making: Limits, Lessons, and Opportunities](https://mlsanity.com/paper/2301.05753/) (2023)
- [Regulatory Instruments for Fair Personalized Pricing](https://mlsanity.com/paper/2202.04245/) (2022)
- [Utility Fairness in Contextual Dynamic Pricing with Demand Learning](https://mlsanity.com/paper/2311.16528/) (2023)
- [Network Revenue Management with Demand Learning and Fair Resource-Consumption Balancing](https://mlsanity.com/paper/2207.11159/) (2022)
- [Algorithmic Challenges in Ensuring Fairness at the Time of Decision](https://mlsanity.com/paper/2103.09287/) (2021)
- [Mind the Gap: Optimal and Equitable Encouragement Policies](https://mlsanity.com/paper/2309.07176/) (2023)
- [Fairness Incentives in Response to Unfair Dynamic Pricing](https://mlsanity.com/paper/2404.14620/) (2024)
- [Robust personalized pricing under uncertainty of purchase probabilities](https://mlsanity.com/paper/2407.15332/) (2024)
- [Balancing Profit and Fairness in Risk-Based Pricing Markets](https://mlsanity.com/paper/2506.00140/) (2025)
- [Optimizing ARDL Models for Retail Sales Forecasting and Fair Pricing](https://mlsanity.com/paper/2607.09956/) (2026)

## Abstract (arXiv)

We study the interplay of fairness, welfare, and equity considerations in personalized pricing based on customer features. Sellers are increasingly able to conduct price personalization based on predictive modeling of demand conditional on covariates: setting customized interest rates, targeted discounts of consumer goods, and personalized subsidies of scarce resources with positive externalities like vaccines and bed nets. These different application areas may lead to different concerns around fairness, welfare, and equity on different objectives: price burdens on consumers, price envy, firm revenue, access to a good, equal access, and distributional consequences when the good in question further impacts downstream outcomes of interest. We conduct a comprehensive literature review in order to disentangle these different normative considerations and propose a taxonomy of different objectives with mathematical definitions. We focus on observational metrics that do not assume access to an underlying valuation distribution which is either unobserved due to binary feedback or ill-defined due to overriding behavioral concerns regarding interpreting revealed preferences. In the setting of personalized pricing for the provision of goods with positive benefits, we discuss how price optimization may provide unambiguous benefit by achieving a "triple bottom line": personalized pricing enables expanding access, which in turn may lead to gains in welfare due to heterogeneous utility, and improve revenue or budget utilization. We empirically demonstrate the potential benefits of personalized pricing in two settings: pricing subsidies for an elective vaccine, and the effects of personalized interest rates on downstream outcomes in microcredit.