Working paper
“Consumer fairness concerns and third-degree price discrimination of two-sided platforms,” with Jing Su
Presentations: The 14th Lisbon Meetings in Game Theory and Applications 2025; 30th ENTER Jamboree 2025; XIII IBEO Workshop 2024; 7th Doctoral Workshop on the Economics of Digitization 2024; LiDAM Spring Doctoral Workshop in Economics 2023
Abstract
This paper studies how consumers’ concerns about fairness influence third-degree price discrimination of a two-sided monopoly platform. We show that the presence of fairness concerns creates a negative demand externality from low-willingness-to-pay to high-willingness-to-pay consumers, that is, charging less to the former reduces the latter’s demand. With this novel externality, price-discriminating among consumers triggers fairness concerns, which lowers consumer-side demand and ultimately restricts the platform’s profit exploitation from the seller side. Hence, a platform whose profit potential from sellers is larger would take consumers’ fairness concerns more seriously and price-discriminate less. The results can explain why some major online platforms-despite the profit potential of tailoring prices-shy away from price discrimination in response to consumers’ fairness concerns, while others always price-discriminate among consumers.
“Standardized testing for college entrance: evidence from a major reform in China,” with Philip Verwimp
Presentations: XIII IBEO Workshop 2024; LiDAM Spring Doctoral Workshop in Economics 2024; ECARES Xmas PhD Workshop 2021
Work in progress
“Manipulating price inequality aversion without obfuscation,” with Jing Su and Litao Duan
Presentations: ECARES St. Nicolas/Xmas PhD Workshop 2025
Abstract
We conduct two series of laboratory experiments to investigate how consumers’ aversion to price inequality among homogeneous goods can be manipulated without shrouding prices or obfuscating goods. In Study I, we introduce external reference prices and vary the price differences that subjects observe. While high-price subjects show distrust of the introduced reference prices, a higher reference price reduces their price inequality aversion in an unconscious way when the price differences are neither large nor small enough for a binary acceptability judgment. In Study II, we vary the observed ratios of high-price to low-price offers. High-price subjects keep their price inequality aversion at a strong level as long as low-price offers account for the majority; otherwise, their price inequality aversion significantly weakens as the share of low-price offers shrinks. We further present field evidence and a theoretical analysis, showing that retailers can exploit by delicately manipulating the price distribution that consumers observe among homogeneous goods.
Sirui Li 