Personalization from Customer Data Aggregation Using List Price

When consumers’ inferences of their reservation values are subject to environmental noise, firms can use customer data aggregation to obtain superior knowledge. This facilitates personalized pricing but may also induce consumer suspicions of overpaying. To alleviate the suspicions and convince consumers of their value, the firm may design its personalization scheme to include a list price in addition to the personalized prices. We find that only...