When consumers' inferences of their reservation values are subject to environmental noise, firms can obtain superior knowledge over consumers through customer data aggregation. Although the superior knowledge facilitates personalized pricing, it may also induce consumer suspicions of overpaying....

This research studies the product line design problem when consumers are subject to perceptual errors when assessing their intrinsic preferences. If the errors are driven by common variables, then a firm can filter out the impact of these variables using aggregate consumer data (e.g. survey...