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Algorithmic Pricing and Consumer Vulnerability: The Ethical and Economic Implications of Artificial Intelligence (AI)-Driven Pricing Models

M. Kamraju(1),


(1) Army Welfare Education society
Corresponding Author

Abstract


The rise of algorithmic pricing and Artificial intelligence (AI)-driven personalized pricing models has reshaped digital commerce, allowing businesses to adjust prices dynamically. Because these models rely on consumer data, urgency, and behavioral triggers, they often result in price discrimination and reduced market transparency. This study examines surge pricing in ride-hailing services, dynamic airfare adjustments, and e-commerce price steering, highlighting how these tactics exploit consumer psychology. Because regulatory oversight remains weak, companies can leverage AI-driven strategies without accountability, leading to financial strain on consumers. Using case studies and literature analysis, this paper reveals that pricing fairness and ethical AI governance are critical concerns in modern markets. Findings suggest that increased transparency, stronger regulations, and ethical algorithmic design are essential to ensure fairer digital pricing practices. The study contributes to the ongoing debate on AI ethics, consumer rights, and regulatory frameworks in the digital economy.

Keywords


Algorithmic pricing; Consumer vulnerability; Market transparency; Regulatory frameworks; Surge pricing

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