IDEAS home Printed from https://ideas.repec.org/p/zbw/dicedp/285371.html
   My bibliography  Save this paper

Human-machine interactions in pricing: Evidence from two large-scale field experiments

Author

Listed:
  • Huelden, Tobias
  • Jascisens, Vitalijs
  • Roemheld, Lars
  • Werner, Tobias

Abstract

While many companies use algorithms to optimize their pricing, additional human oversight and price interventions are widespread. Human intervention can correct algorithmic flaws and introduce private information into the pricing process, but it may also be based on less sophisticated pricing strategies or suffer from behavioral biases. Using fine-grained data from one of Europe's largest e-commerce companies, we examine the impact of human intervention on the company's commercial performance in two field experiments with around 700,000 products. We show that sizeable heterogeneity exists and present evidence of interventions that harmed commercial performance and interventions that improved firm outcomes. We show that the quality of human interventions can be predicted with algorithmic tools, which allows us to exploit expert knowledge while blocking inefficient interventions.

Suggested Citation

  • Huelden, Tobias & Jascisens, Vitalijs & Roemheld, Lars & Werner, Tobias, 2024. "Human-machine interactions in pricing: Evidence from two large-scale field experiments," DICE Discussion Papers 412, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:285371
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/285371/1/1883092809.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nikhil Agarwal & Alex Moehring & Pranav Rajpurkar & Tobias Salz, 2023. "Combining Human Expertise with Artificial Intelligence: Experimental Evidence from Radiology," NBER Working Papers 31422, National Bureau of Economic Research, Inc.
    2. Diego Aparicio & Zachary Metzman & Roberto Rigobon, 2021. "The Pricing Strategies of Online Grocery Retailers," NBER Working Papers 28639, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Simon Martin & Hans-Theo Normann & Paul Püplichhuisen & Tobias Werner, 2025. "The Spoils of Algorithmic Collusion: Profit Allocation Among Asymmetric Firms," CESifo Working Paper Series 11629, CESifo.
    2. Normann, Hans-Theo & Martin, Simon & Püplichhuisen, Paul & Werner, Tobias, 2025. "The Spoils of Algorithmic Collusion: Profit Allocation Among Asymmetric Firms," VfS Annual Conference 2025 (Cologne): Revival of Industrial Policy 325405, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sullivan, Tom, 2022. "Price dispersion in the rideshare industry : a study of the Mexico City market," Warwick-Monash Economics Student Papers 40, Warwick Monash Economics Student Papers.
    2. Riccardo Zanardelli, 2025. "The human-machine paradox: how collaboration creates or destroys value, and why augmentation is key to resolving it," Papers 2509.14057, arXiv.org, revised Nov 2025.
    3. Andrew Rhodes & Jidong Zhou, 2024. "Personalized Pricing and Competition," American Economic Review, American Economic Association, vol. 114(7), pages 2141-2170, July.
    4. Jingyi Cui & Gabriel Dias & Justin Ye, 2025. "Signaling in the Age of AI: Evidence from Cover Letters," Papers 2509.25054, arXiv.org, revised Nov 2025.
    5. Martin Baily & David Byrne & Aidan Kane & Paul Soto, 2025. "Generative AI at the Crossroads: Light Bulb, Dynamo, or Microscope?," Papers 2505.14588, arXiv.org, revised Sep 2025.
    6. Obidzinski, Marie & Oytana, Yves, 2024. "Artificial intelligence, inattention and liability rules," International Review of Law and Economics, Elsevier, vol. 79(C).
    7. Marie Obidzinski & Yves Oytana, 2025. "Advisory algorithms, automation bias and liability rules," Working Papers 2025-08, CRESE.
    8. Yuhao Fu & Nobuyuki Hanaki, 2024. "Do people rely on ChatGPT more than their peers to detect deepfake news?," ISER Discussion Paper 1233r, Institute of Social and Economic Research, The University of Osaka, revised Dec 2024.
    9. Michele Fioretti & Junnan He & Jorge Tamayo, 2024. "Prices and Concentration: A U-Shape? Theory and Evidence from Renewables," Working Papers hal-04631762, HAL.
    10. Chen, I-Ju & Hsu, Po-Hsuan & Wang, Yanzhi, 2022. "Staggered boards and product innovations: Evidence from Massachusetts State Bill HB 5640," Research Policy, Elsevier, vol. 51(4).
    11. Strasser, Georg & Wieland, Elisabeth & Macias, Paweł & Błażejowska, Aneta & Szafranek, Karol & Wittekopf, David & Franke, Jörn & Henkel, Lukas & Osbat, Chiara, 2023. "E-commerce and price setting: evidence from Europe," Occasional Paper Series 320, European Central Bank.
    12. Grimon, Marie-Pascale & Mills, Christopher, 2025. "Better Together? A Field Experiment on Human-Algorithm Interaction in Child Protection," SOFI Working Papers in Labour Economics 2/2025, Stockholm University, Swedish Institute for Social Research.
    13. Andrei Iakovlev & Annie Liang, 2024. "The Value of Context: Human versus Black Box Evaluators," Papers 2402.11157, arXiv.org, revised Jun 2024.
    14. L. Elisa Celis & Lingxiao Huang & Nisheeth K. Vishnoi, 2025. "A Mathematical Framework for AI-Human Integration in Work," Papers 2505.23432, arXiv.org, revised May 2025.
    15. John Asker & Chaim Fershtman & Ariel Pakes, 2024. "The impact of artificial intelligence design on pricing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(2), pages 276-304, March.
    16. Hanzhe Li & Jin Li & Ye Luo & Xiaowei Zhang, 2024. "AI Persuasion, Bayesian Attribution, and Career Concerns of Doctors," Papers 2410.01114, arXiv.org.
    17. David Almog & Romain Gauriot & Lionel Page & Daniel Martin, 2024. "AI Oversight and Human Mistakes: Evidence from Centre Court," Papers 2401.16754, arXiv.org, revised Feb 2025.
    18. Felix Chopra & Ingar Haaland, 2023. "Conducting qualitative interviews with AI," CEBI working paper series 23-06, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    19. R. Maria del Rio-Chanona & Ekkehard Ernst & Rossana Merola & Daniel Samaan & Ole Teutloff, 2025. "AI and jobs. A review of theory, estimates, and evidence," Papers 2509.15265, arXiv.org.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:dicedp:285371. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/diduede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.