On the Consumer Psychology of Automation

Department of Marketing

Abstract

Marketing processes are increasingly becoming automated, from segmentation and targeting to service provision, advertising, distribution, retailing, and pricing. The ability to track individuals’ behavior online and to merge multiple data sources into “big data” sets increasingly allows marketers to target consumers individually. Machine learning-based algorithms can tailor product offers, advertisements, and prices to individuals in real time: Utopia has become real for marketers. Such personalization boosts companies’ profitability from more accurate price discrimination, and consumers enjoy convenience and offers tailored to their needs. However, automating and personalizing interactions may also have less positive economic and psychological consequences for consumers, among them higher individual prices and threats to their perceived autonomy. The presentation will feature selected results from several ongoing experimental research into some of the more dystopian costs, which automation poses to consumers. Our experiments reveal systematic mistakes in how consumers value their privacy, suboptimal consumer choices in response to autonomy threats from prediction algorithms, and benefits for companies of providing different types of explanations to their customers for service denial decisions made by (un)explainable algorithms.

Note: This research seminar has been cancelled without further notice.