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Recently, Delta Air Lines announced it would expand its use of artificial intelligence to provide individualized prices to customers. This move sparked concern among flyers and politicians. But Delta isnt the only business interested in using AI this way. Personalized pricing has already spread across a range of industries, from finance to online gaming. Customized pricingwhere each customer receives a different price for the same productis a holy grail for businesses because it boosts profits. With customized pricing, free-spending people pay more while the price-sensitive pay less. Just as clothes can be tailored to each person, custom pricing fits each persons ability and desire to pay. I am a professor who teaches business school students how to set prices. My latest book, The Power of Cash: Why Using Paper Money is Good for You and Society, highlights problems with custom pricing. Specifically, Im worried that AI pricing models lack transparency and could unfairly take advantage of financially unsophisticated people. The history of custom pricing For much of history, customized pricing was the normal way things happened. In the past, business owners sized up each customer and then bargained face-to-face. The price paid depended on the buyers and sellers bargaining skillsand desperation. An old joke illustrates this process. Once, a very rich man was riding in his carriage at breakfast time. Hungry, he told his driver to stop at the next restaurant. He went inside, ordered some eggs, and asked for the bill. When the owner handed him the check, the rich man was shocked at the price. Are eggs rare in this neighborhood? he asked. No, the owner said. Eggs are plentiful, but very rich men are quite rare. Custom pricing through bargaining still exists in some industries. For example, car dealerships often negotiate a different price for each vehicle they sell. Economists refer to this as first-degree or perfect price discrimination, which is perfect from the sellers perspective because it allows them to charge each customer the maximum amount theyre willing to pay. Currently, most American shoppers dont bargain but instead see set prices. Many scholars trace the rise of set prices to John Wanamakers Philadelphia department store, which opened in 1876. In his store, each item had a nonnegotiable price tag. These set prices made it simpler for customers to shop and became very popular. Why uniform pricing caught on Set prices have several advantages for businesses. For one thing, they allow stores to hire low-paid retail workers instead of employees who are experts in negotiation. Historically, they also made it easier for stores to decide how much to charge. Before the advent of AI pricing, many companies determined prices using a cost-plus rule. Cost-plus means a business adds a fixed percentage or markup to an items cost. The markup is the percentage added to a products cost that covers a companys profits and overhead. The big-box retailer Costco still uses this rule. It determines prices by adding a roughly 15% maximum markup to each item on the warehouse floor. If something costs Costco $100, they sell it for about $115. The problem with cost-plus is that it treats all items the same. For example, Costco sells wine in many stores. People buying expensive Champagne typically are willing to pay a much higher markup than customers purchasing inexpensive boxed wine. Using AI gets around this problem by letting a computer determine the optimal markup item by item. What personalized pricing means for shoppers AI needs a lot of data to operate effectively. The shift from cash to electronic payments has enabled businesses to collect whats been called a gold mine of information. For example, Mastercard says its data lets companies determine optimal pricing strategies. So much information is collected when you pay electronically that in 2024 the Federal Trade Commission issued civil subpoenas to Mastercard, JPMorgan Chase, and other financial companies demanding to know how artificial intelligence and other technological tools may allow companies to vary prices using data they collect about individual consumers finances and shopping habits. Experiments at the FTC show that AI programs can even collude among themselves to raise prices without human intervention. To prevent customized pricing, some states have laws requiring retailers to display a single price for each product for sale. Even with these laws, its simple to do custom pricing by using targeted digital coupons, which vary each shoppers discount. How you can outsmart AI pricing There are ways to get around customized pricing All depend on denying AI programs data on past purchases and knowledge of who you are. First, when shopping in brick-and-mortar stores, use paper money. Yes, good old-fashioned cash is private and leaves no data trail that follows you online. Second, once online, clear your cache. Your search history and cookies provide algorithms with extensive amounts of information. Many articles say the protective power of clearing your cache is an urban myth. However, this information was based on how airlines used to price tickets. Recent analysis by the FTC shows the newest AI algorithms are changing prices based on this cached information. Third, many computer pricing algorithms look at your location, since location is a good proxy for income. I was once in Botswana and needed to buy a plane ticket. The price on my computer was about $200. Unfortunately, before booking I was called away to dinner. After dinner my computer showed the cost was $1,000five times higher. It turned out after dinner I used my universitys VPN, which told the airline I was located in a rich American neighborhood. Before dinner I was located in a poor African town. Shutting off the VPN reduced the price. Last, often to get a better price in face-to-face negotiations, you need to walk away. To do this online, put something in your basket and then wait before hitting purchase. I recently bought eyeglasses online. As a cash payer, I didnt have my credit card handy. It took five minutes to find it, and the delay caused the site to offer a large discount to complete the purchase. The computer revolution has created the ability to create custom products cheaply. The cashless society combined with AI is setting us up for customized prices. In a custom-pricing situation, seeing a high price doesnt mean something is higher quality. Instead, a high price simply means a business views the customer as willing to part with more money. Using cash more often can help defeat custom pricing. In my view, however, rapid advances in AI mean we need to start talking now about how prices are determined, before customized pricing takes over completely. Jay L. Zagorsky is an associate professor at the Questrom School of Business at Boston University. This article is republished from The Conversation under a Creative Commons license. Read the original article.
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E-Commerce
Vanessa Urch Druskat is an associate professor of organizational behavior at the University of New Hampshire. She is a social and organizational psychologist, an award-winning scholar, and a pioneer of the concept of team emotional intelligence. Vanessa also serves on the executive board of the Consortium for Research on Emotional Intelligence in Organizations. Whats the big idea? There is abundant evidence that teams are far better than individuals at making difficult decisions and solving complex problems. In fact, high-performing teamwork has driven every major innovation in human history. But how do you build an excellent team? Thats the challenge. It turns out that its not that difficult once you know the basic guidelines, but it does involve persistent intent and team involvement. Below, Vanessa shares five key insights from her new book, The Emotionally Intelligent Team: Building Collaborative Groups that Outperform the Rest. Listen to the audio versionread by Vanessa herselfbelow, or in the Next Big Idea App. 1. Building great teams is not about hiring stars. Many leaders believe that building a high-performing team requires hiring star employees. However, intelligence, abilities, and personalities are poor predictors of how people behave in teams and what they can contribute to a teams success. This evidence has existed for decades, but most people have been indoctrinated into focusing on individual performance. By far, the best predictor of motivation and behavior in teams is the specific norms that a team adopts to define how members will interact and work together. Norms are the patterns of behavior, routines, habits, and rituals that define a teams culture, making each team unique. Norms vary greatly among teams conducting the same tasks. They also affect the extent to which team members intrinsic needs are addressed, which in turn arouses the emotions that influence their motivation and trust in teamwork and collaboration. For example, neuroscientists find that evolution has shaped us to be highly sensitive to signals of disrespect and social rejection. These emotions foster distrust in teamwork and motivate self-protection and conformity driven by egoistic concerns. Teamwork thrives when norms foster and maintain a sense of belonging within a community. On the other hand, neuroscience reveals that our brain craves a sense of genuine acceptance and mutual support within groups. Teamwork thrives when norms foster and maintain a sense of belonging within a community. We found such norms in the highest-performing teams we studied across industries. The reliability of these norms engendered trust, psychological safety, and a shared sense of ownership over team outcomes. Members felt more in control of their own fateand the teams. Formal and informal team leaders establish the norms that govern behavior within teams. Many leaders unknowingly propagate norms that dont support belongingness and trust. Instead, in the name of efficiency, they establish norms that prioritize the direct exchange of information and resources without requiring empathy or mutual support. On the surface, this can seem perfectly satisfactory to leaders. Our research identifies such norms in average-performing teams across industries. The lack of community reduces engagement and collaboration, which are essential to innovation and high-performing teamwork. The disappointment this creates can lead to disengagement and, in some cases, even destructive behavior. 2. Your team needs emotionally intelligent norms. My colleagues and I found that the best teams adopt emotionally intelligent norms. These norms address the innate needs of all team members, thereby creating a productive social and emotional environment that supports active participation, effort, and critical, sometimes heated, debates that lead to successful team decisions and outcomes. The leaders of the highest-performing teams dont just hope that team members generosity and social skills will emerge to support effective collaboration. They intentionally create these norms and routines. 3. Team members need to understand each other better. My colleagues and I worked with a global leadership team that wasnt reaching its full potential because members were working in silos rather than focusing on the teams shared goals. They were competing with one another, rather than collaborating. The leaders of the highest-performing teams dont just hope that team members generosity and social skills will emerge to support effective collaboration. With our help, they decided to adopt norms and routines that enabled them to learn more about each others roles and responsibilities. They even visited one anothers office locations. It boosted their sense of belonging and mutual support, which enabled the sharing of feedback and ideas that benefited the success of each person. Much of this feedback helped increase the emotional intelligence of individual team members, which in turn improved their relationships outside of the team. Think of it this way: No sports team or musical group would assume they could play well together unless they knew something about their teammates unique backgrounds and talents, as well as what that person needed from others to play at their best. 4. You need routine assessments of the teams strengths and opportunities. We worked with a team whose new leader was overly controlling and projected his fear of making mistakes onto his teammates. Team performance declined, prompting the leader to replace two team members. As a result, team members felt undervalued and fearful, which increased competition within the team and hindered collaboration. With the leaders support, they developed a proactive action plan to adopt team norms, which included monthly structured meetings. During these meetings, team members first discussed what was and wasnt working well in the team and brainstormed changes they would incorporate to ensure their teams goal achievement. Their new norms increased their focus on helping and learning from one another. By collaborating to address the teams and members challenges, the team leaders confidence in the team increased, and the team outpaced its competitors within the year. You need to develop norms that engage your team in both optimistic and pessimistic discussions. The team needs to both anticipate problems and create a vivid, hopeful, and motivating view of their ability to achieve shared success. 5. Engaging with stakeholders fosters innovative thinking within teams. One team we worked with adopted a norm of ensuring stakeholder communication and involvement. They developed a stakeholder map that listed their stakeholders and then assigned one team mmber to serve as an ambassador to each. The information they obtained helped them think more strategically about their priorities and ask for resources that would support their performance (for example, support for changes that the team sought). In one manufacturing organization, good relationships with stakeholders enabled a team to receive new and improved equipment. In a pharma team, good relationships allowed the team to receive quicker decisions from senior management. You need to develop norms that engage your team in both optimistic and pessimistic discussions. The highest-performing teams we studied recognized that they did not have all the information and resources they needed to succeed within their teams. I like to say that a team doesnt need to reinvent the wheel if they talk to someone outside of their team to learn that the wheel exists. Building high-performing teams is not rocket science, but it does require leaders to recognize that team building is not about fixing people or hiring for the perfect set of skills. The leader of one of the highest-performing teams we studied in a Fortune 100 company said it best when she told me: No one on my team has A+ skills, but we collaborate in ways that produce A+ work. If there is a secret to building great teams, its the need to develop interaction norms and routines that bring out the best in team members and utilize team members talents. Emotionally intelligent norms arouse intrinsic motivation and build continuous assessment, learning, and adaptation into a teams everyday culture. This article originally appeared in Next Big Idea Club magazine and is reprinted with permission.
Category:
E-Commerce
Do you ever have those weeks where you feel youve gotten nothing done? You’re staring at your screen, the same paragraph you’ve read three times still making no sense. Your mind drifts to that looming deadline, the difficult conversation with your manager, leaving before 3 to avoid a horrible commute, or the growing pile of unread emails. Sound familiar? You’re not alone. Almost half (43%) of Americans report feeling more anxious than they did the previous year, with workplace pressures playing a significant role in this epidemic of stress. The new brand of stress that 80% of workers report centers around productivity anxiety at work according to a recent study. The very stress that pushes us to work harder is now sabotaging our ability to perform well. Understanding this paradoxand more importantly, knowing how to break free from itcould be the key to reclaiming both your productivity and peace of mind. The Science of Stress: Your Brain Under Siege Not surprisingly, the biggest culprit of productivity anxiety is stress. When stress hits, your body doesn’t distinguish between a charging lion and a challenging quarterly review. The same ancient alarm system kicks in, flooding your system with cortisolthe primary stress hormone that can transform from helpful motivator to harmful hijacker. Cortisol levels peak in the early morning as part of the cortisol awakening response, then decrease throughout the day. But chronic workplace stress disrupts this natural rhythm, keeping cortisol elevated when it should be declining. The result? A brain struggling to perform its most essential workplace functions, including just seeing things properly. Research reveals the cognitive toll is severe. One study found that acute increases in corticosteroid levels are associated with cognitive decrements in both attention and memory. Three Ways Stress Sabotages Your Focus 1. The Working Memory Meltdown Your working memorythe mental workspace where you juggle information, solve problems, and make decisionsis particularly vulnerable to stress. Tasks that engage and rely on working memory seem to be particularly sensitive to pressure demands, possibly because working memory requires sustained focus and attention that acute pressure might disrupt. This explains why, under stress, you might forget what you just read or struggle to connect ideas that normally flow effortlessly. 2. The Attention Hijack All theories about choking under pressure involve the reallocation of attention away from the task at hand. Some researchers suggest stress pulls your attention toward the uncomfortable feelings it creates, while others argue it makes you hyperaware of your own performance, paradoxically impairing it. Either way, your focus fractures. 3. The Productivity Anxiety Spiral Since modern workplaces have birthed this new phenomenon of “productivity anxiety,” there has been a significant uptick in employees reporting a feeling that there is always more they should be doing, even if not humanly possible. This creates a vicious cycle where stress about productivity further impairs your ability to be productive, leading to more stress. Stress has a way of taking up your time by making you continuously worry about something that may or may not happen. Perhaps this scenario is best illustrated by my client Tim. Tim manages a large and critical function at an aerospace firm. With 16 direct reports, hundreds more in his organization, and a cadre of contractors, Tim is still the go-to for any technical questions or emergencies that arise. It wasnt until recently that I reminded Tim that a healthy number of direct reports for most leaders is no more than five, with far less technical work, and under far less work intensification that he perked up, realizing much of the problem he is managing is due to poor organizational design. 3 Evidence-Based Strategies to Reclaim Your Focus 1. Take a Walk Outside The research is compelling: stepping outside for a walk is one of the most accessible and effective tools for combating workplace stress and restoring focus. Studies show that spending at least 20 to 30 minutes immersed in a natural setting is associated with the biggest drop in cortisol levels. Even more impressive, compared to urban walks, nature walks resulted in decreased anxiety, rumination, and negative affect, as well as increased working memory performance. Walks either with or without music have mental health benefits. How to implement: Schedule a 20-minute walk outside during your workday, ideally in a green space. Can’t access nature? Even urban walks help. The beauty is you don’t need to power walkor even walk; both walking and sitting outdoors improve cognitive performance, with elevated levels of relaxation during the intervention being the best predictor of improved performance. 2. Practice Strategic Stress Recovery Individuals who have a higher frustration tolerance, the ability to moderate their responses to stress in the moment, have the capacity to think clearly and effectively work through problems longer and engage in productive decision making. Having an awareness of being triggered by observing physical shifts like heart rate changes, or a sudden burning chest sensation when stress hits, is critical data. Once aware, intentional choices can be made that mitigate reactionary stress behaviors: stepping away from a tough problem temporarily or engaging in deep breathing for a few minutes are both research backed ways of mitigating stress in the moment. Those able to do so expand their frusration tolerance, build the capacity to moderate other stress reactions with confidence, and experience less negative long-term effects from their stress. How to implement: Build recovery periods into your workday, which will start to create muscle memory. When a problem becomes particularly intense, take note to feel in your body where the pressure mounts. Common areas of feeling bodily stress are chest, temples on either side of your head, neck, or stomach. Being attuned to this is critical. Once youre aware of stress building in your body, step away from the problem at hand, and take a break such as a five-minute walk, practice deep breathing, or engage in light stretching. After any intensive work or problem-solving sessions, these micro-recoveries help reset your stress response system. 3. Restructure Your Work Environment for Focus People who are stressed have difficulty focusing and find themselves getting caught in modes of thinking that perpetuate stress, such as worry and rumination. Combat this by creating environmental cues that support focus. Also an organized workspace has positive effects on distractions and ability to focus. How to implement: Establish clear boundaries between high-focus work and administrative tasks. Use time-blocking to protect your most cognitively demanding work for times when your cortisol is naturally lower (typically midmorning after cortisol has subsided). Create a “focus ritual”a consistent set of actions that signal to your brain it’s time for deep work. Once or twice a week, block time on your calendar to clear your space of clutter, take out the trash, process any snail mail that comes in, and regularly delete files and screenshots no longer needed that sit on your screen. Such peripheral clutter cleaning makes clearer thinking possible, and it makes those things you need to find easier to find. Small steps with big impacts Job stress costs U.S. employers more than $300 billion annually due to absenteeism, turnover, decreased productivitybut the human cost is even greater. The good news? You don’t have to accept chronic stress as an inevitable part of modern work life. Start small. Choose one strategy and commit to it for two weeks. Notice not just how you feel, but how you thinkhow ideas flow, how problems untangle, how focus sharpens. Because when you master the art of managing stress, you don’t just survive the workday; you unlock your brain’s full potential to create, innovate, and excel. Your focused, calm, and productive self is waiting. It’s time to clear away the stress and let that person shine through.
Category:
E-Commerce
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