Personalized Pricing in Social Networks with Individual and Group Fairness Considerations

TL;DR

This paper introduces FairPricing, a graph neural network-based framework that balances personalized pricing profitability with individual and group fairness considerations in social networks.

Contribution

It presents a novel GNN-based approach that integrates fairness constraints into personalized pricing, addressing both individual and group fairness simultaneously.

Findings

FairPricing achieves high profitability in experiments.

It improves individual fairness perceptions.

It satisfies group fairness requirements.

Abstract

Personalized pricing assigns different prices to customers for the same product based on customer-specific features to improve retailer revenue. However, this practice often raises concerns about fairness at both the individual and group levels. At the individual level, a customer may perceive unfair treatment if he/she notices being charged a higher price than others. At the group level, pricing disparities can result in discrimination against certain protected groups, such as those defined by gender or race. Existing studies on fair pricing typically address individual and group fairness separately. This paper bridges the gap by introducing a new formulation of the personalized pricing problem that incorporates both dimensions of fairness in social network settings. To solve the problem, we propose FairPricing, a novel framework based on graph neural networks (GNNs) that learns a personalized pricing policy using customer features and network topology. In FairPricing, individual perceived unfairness is captured through a penalty on customer demand, and thus the profit objective, while group-level discrimination is mitigated using adversarial debiasing and a price regularization term. Unlike existing optimization-based personalized pricing, which requires re-optimization whenever the network updates, the pricing policy learned by FairPricing assigns personalized prices to all customers in an updated network based on their features and the new network structure, thereby generalizing to network changes. Extensive experimental results show that FairPricing achieves high profitability while improving individual fairness perceptions and satisfying group fairness requirements.