Algorithmic Personalized Pricing with the Right to Explanation

Personalized pricing by algorithms has been widely deployed by digital platforms. Although this strategy provides economic efficiencies and benefits consumers, it precipitates discriminatory, exploitative, and exclusionary effects on the market. If massive market power and certain information asymmetry exist, this pricing behavior could be illegal as the negatives could outweigh the positives. The negatives could nevertheless not be fully addressed by current ex-post and ex-ante antitrust, consumer protection, and anti-discrimination approaches because the sloping pricing information between platforms and consumers based on data will not be effectively rebalanced considering these approaches. Data protection measures should be underlined, despite the flaws of some data rights. This article shows how the right to explanation as a synthetic right of data protection mitigates the damaging effects by providing consumers with the access to the result of algorithmic decision-making to optimize the information distribution, despite the application limits due to technological and cognitive immatureness of ‘explanation’.