With the Selten Lecture, ECONtribute and the Reinhard Selten Institute invite renowned researchers once a year to present their research to the academic community. This year Prof. Dr. Philipp Strack (Yale University) will talk about „Non-Discriminatory Personalized Pricing“.
A monopolist offers personalized prices to consumers with unit demand, heterogeneous values, and idiosyncratic costs, who differ in a protected characteristic, such as race or gender. The seller is subject to a non-discrimination constraint: consumers with the same cost, but different characteristics must face identical prices. Such constraints arise in regulated markets like credit or insurance. The setting reduces to an optimal transport, and we characterize the optimal pricing rule. Under this rule, consumers may retain surplus, and either group may benefit. Strengthening the constraint to cover transaction prices redistributes surplus, harming the low-value group and benefiting the high-value group.