On Common Cents Economics, we’ve talked before about dynamic pricing, the practice of using algorithms to figure out the highest price a customer is willing (and able) to pay. You’ve probably run into it without even realizing. Wendy’s once experimented with it (with limited success), while Amazon has used it so effectively that we hardly bat an eye anymore when prices shift throughout the day.
Dynamic Pricing in Air Travel
But now, the practice is entering a new phase. Delta Airlines and others are working with a startup called Fetcher, which uses artificial intelligence not just to calculate supply and demand, but to dig deeper into personal circumstances. Delta calls this AI their “super analyst” and that name alone should raise eyebrows.
Why? Because this isn’t just about the old model of charging more during peak travel seasons. This new system uses personal data to predict how much you specifically might be willing to pay. Let’s say you post on social media that you’re traveling to attend a funeral. AI tools could pick up on that information and flag you as someone with less flexibility—meaning you’d likely pay more for a ticket than someone booking a spontaneous vacation.
In other words, instead of basing price primarily on market conditions, this kind of AI-enabled pricing prioritizes your personal needs and vulnerabilities. Economically, that’s a big departure from the usual supply-and-demand framework.
Unsurprisingly, this has caught the attention of lawmakers and consumer advocates. If left unchecked, it could cross the line into something that feels less like fair competition and more like exploitation. While there aren’t yet specific regulations in place, the growing concern suggests that some form of governance may be on the horizon.
Dynamic Pricing or Price Discrimination
The technical term for all this is price discrimination, charging different prices to different people for the same product. Economists have long recognized the concept, but it’s been historically difficult to pull off. After all, how do you know what an individual is really willing to pay? That’s where technology changes the game. With enough data, companies may be able to get frighteningly close to the answer.
So, what can consumers do? The simplest protection is also the most practical: limit how much of your personal life you put online. The less information there is to scrape, the harder it is for AI systems to draw conclusions about your willingness to pay. It may not eliminate the issue entirely, but it’s a step toward safeguarding your wallet.
Dynamic pricing isn’t going away. In fact, with AI’s involvement, it’s likely to become more common and more controversial. For now, the best strategy is to stay informed, cautious, and mindful about the personal data we share.
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