Slashdot Mirror

← Back to Stories (view on slashdot.org)

Left To Their Own Devices, Pricing Algorithms Resort To Collusion (popularmechanics.com)

Posted by msmash on from the closer-look dept.

Reader schwit1 shares a report: When you're browsing online, who sets the prices? An algorithm, most likely. A study from 2015 showed that a third of all items on Amazon [PDF] had prices set by an algorithm, and chances are that percentage has only risen. A new study shows how easy it would be for price-setting algorithms to learn to collude with each other and keep prices at a disadvantage for customers.

This sort of collusion would stem from a certain type of algorithm, the researchers say. Reinforcement algorithms learn through trial and error. In the simplest terms, a walking robot would take a step, fall, and try again. These algorithms have often been used to teach algorithms to win games like Go.

"From the antitrust standpoint," say professors Emilio Calvano, Giacomo Calzolari, and others from the University of Bologna in Italy, "the concern is that these autonomous pricing algorithms may independently discover that if they are to make the highest possible profit, they should avoid price wars. That is, they may learn to collude even if they have not been specifically instructed to do so, and even if they do not communicate with one another."

78 of 128 comments (clear)

  1. Collusion? by XanC · · Score: 3, Interesting

    "and even if they do not communicate with one another"

    Well that can be the case with people, too, can it not? Except that when people do not communicate with each other, I don't believe that it can be said to be colluding, by definition. So why is it collusion when algorithms do it?

    1. Re:Collusion? by Shaitan · · Score: 4, Insightful

      "Independent algorithms (or people) arriving at the same conclusion from the same data and openly performing actions in their own self-interest without communication is not collusion."

      If it comes to the same anti-consumer result and the same result as monopoly behavior in a free market it is collusion. Or insert a new word for what is bad and can't be tolerated if we are to have a sound economy.

      It doesn't matter if it is one monopoly fixing terms and pricing in an anti-competitive way, 8 companies with common interest doing the same, or 10,000 doing the same. The active communication isn't the issue. And it isn't just pricing, the major chip manufacturers engage in this sort of anti-competative behavior and coordinate on release rates by releasing roadmaps of how far they are planning to go with their capacities and features in advance via unspoken (or possibly spoken behind closed doors) agreement with each other.

      "Collusion is an agreement between two or more parties, sometimes illegal–but always secretive–to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair market advantage. It is an agreement among firms or individuals to divide a market, set prices, limit production or limit opportunities."

      An unspoken agreement fits that definition just fine.

    2. Re:Collusion? by Anonymous Coward · · Score: 1

      But they are communicating via the prices they set.

    3. Re:Collusion? by Layzej · · Score: 3, Interesting

      "and even if they do not communicate with one another"

      Well that can be the case with people, too, can it not? Except that when people do not communicate with each other, I don't believe that it can be said to be colluding, by definition. So why is it collusion when algorithms do it?

      In most countries (including Europe and the US) such ‘tacit’ collusion, not relying on explicit intent and communication, is not currently treated as illegal, on the grounds that it is unlikely to occur among human agents and that, even if it did occur, it would be next to impossible to detect. The conventional wisdom, then, is that aggressive antitrust enforcement would be likely to produce many false positives (i.e. condemning innocent conduct), while tolerant policy would result in relatively few false negatives (i.e. excusing anticompetitive conduct). With the advent of AI pricing, however, the concern is that the balance between the two types of error might be altered.

    4. Re:Collusion? by ezdiy · · Score: 2

      Perfect markets produce "cartel" like this when all participants have near equal production capacity - they'll all gauge the price to maximize profit and minimize output as that is the most optimal nash game. And they can do it with no direct collusion, just market ticker.

      However whether amazon is a perfect market with participants of comparable capacity begs question. Real world markets have a stream of newcomers who pull down the majority to their price level and would even refuse to participate in a cartel which would not guarantee same market share they'd have otherwise (see OPEC politics).

      Seems like something far simpler is at play - amazon promoting more expensive resellers in search results, because they'll get more of a cut from those.

    5. Re:Collusion? by ljw1004 · · Score: 2

      If two algorithms are setting prices and learning from how each other is setting prices, then they are communicating. It's a fairly low bitrate communication but it's certainly communication.

      As for intent? I don't know to use that word in relation to algorithms.

    6. Re:Collusion? by CohibaVancouver · · Score: 2

      But they are communicating via the prices they set.

      Exactly, Anonymous Coward.

      If you have a hotdog stand selling smokies for $5 and I set up a hotdog stand two blocks away, note your price, and also sell *my* smokies for $5, I'm not "colluding" - I'm just price-matching. Seems to me that's what these price-bots are doing.

    7. Re:Collusion? by mpercy · · Score: 2

      Prices do indeed constitute communication, but they are in the open. Something done openly is not collusion.

    8. Re:Collusion? by guruevi · · Score: 1

      Not necessarily, they may simply be reacting to consumer demand, much like a store owner does when he sees there are is a lot of demand, they may raise prices, if demand suddenly drops, they may lower prices. If your price fluctuates a lot, so do consumers so in the end you come to a mutual 'agreement' across all parties that works best for everyone (customers and providers) while still guaranteeing a profit.

      What these people want is an algorithm that always goes in the customers' apparent/current best interest (lowest price possible) but this is impossible to sustain.

      --
      Custom electronics and digital signage for your business: www.evcircuits.com
    9. Re:Collusion? by Riceballsan · · Score: 1

      it's true, but that also means we're down to a problem of the laws, and maybe free market in general can't fit with the times anymore. Old logic was if widgets cost me $2 to make, and I sell them for $40 a piece, someone else will start selling widgets for $20 forcing me to either drop my price or go out of business, then someone would likely also see the same thing and start selling them for $10. Unfortunately the whole concept is a bit of a sham... in that the window of time between when you drop your price, and your competitor is forced to match you is short. You'll get one day of 6x your competitors sales for half his profits, then he matches you, and you are now at equal sales, with half profit, if you matched him, you'd have missed that one day of raking in crazy cash... but if no one choses to drop the profit, all sellers win. In short what protects the buyers... is the possibility that someone is going to make a reckless mistake. Why that's coming to light right now.. is that fewer humans are involved, which means the odds of nobody making any mistakes, is a higher threat than ever. Also new contenders know they are price competing against bots, if you enter the market undercutting a bot, the other bots are going to price match you in milliseconds, no customers are even going to see the window of time where you were cheaper, everyone's going to be the same price always, and by dropping the price you just threw away everyone's profit for no benefit. Basically an all robot competition market, is the same as say one company owning the patent for a drug which is the only option for many people to stay alive. it's still more profitable to sell it to 10 people for 1000x the manufacturing cost, than 500 people for 10x the manufacturing cost. As long as you don't have an emotional reason to care about people getting your product, over just maximizing your profit, there's no reason to expect the price to go down.

    10. Re:Collusion? by swillden · · Score: 3, Insightful

      Prices do indeed constitute communication, but they are in the open. Something done openly is not collusion.

      That's not true. Collusion is defined as "secret or illegal cooperation". It generally is secret because doing illegal things openly is likely to result in getting caught, but that doesn't mean that collusion can never be done in public.

      --
      Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
    11. Re:Collusion? by Hognoxious · · Score: 1

      As for intent? I don't know to use that word in relation to algorithms.

      Why not? We all know algorithms can be racist - AmiMoJo says so - so why can't they be corrupt & greedy too?

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
    12. Re:Collusion? by larryjoe · · Score: 2

      Perfect markets produce "cartel" like this when all participants have near equal production capacity - they'll all gauge the price to maximize profit and minimize output as that is the most optimal nash game. And they can do it with no direct collusion, just market ticker.

      Perfect, working markets will use public prices as signals to adjust prices and capacity. This is the way supply and demand is supposed to work, and it can be done without direct collusion. However, there are situations where this dynamic adjustment of prices doesn't work, e.g., if there is a monopoly or if there are no disruptors (i.e., all vendors are willing to keep their market share without competing).

      The problem with the robo-pricers is not the computer aspect. It's that there are no disruptors in the market, either because no one cares to be a disruptor or because the barriers to entry as a vendor are too great.

    13. Re:Collusion? by registrations_suck · · Score: 1

      Also new contenders know they are price competing against bots, if you enter the market undercutting a bot, the other bots are going to price match you in milliseconds, no customers are even going to see the window of time where you were cheaper, everyone's going to be the same price always, and by dropping the price you just threw away everyone's profit for no benefit.

      That opens the door to a new game. Consumers deliberately crashing the market. A consumer can open up a new store and advertise items at a steep discount, never intending to actually ship anything. Such a store could even take orders and refund them "later". By refunding HIS customers when he can't ship, hey, no harm, no foul there. In the meantime - if other stores match that price, then the consumer could buy product from THOSE stores at the discounted price and get some quality stuff, for cheap. In other words, take advantage of robotic price watching to manipulate the market on the items he wants to buy.

      Yes - there are ways to counter this too, nevertheless, it would be successful for at least some period of time - probably long enough to be worth doing if you had a lot of money to spend on stuff you wanted and were organized about it.

    14. Re:Collusion? by ljw1004 · · Score: 1

      Prices do indeed constitute communication, but they are in the open. Something done openly is not collusion.

      https://definitions.uslegal.co... "Such agreements are usually secretive". The fact that the definition includes the word "usually" implies that collusion is not always secret.

      But really we should be looking at the actual anti-trust law, rather than the definition of collusion:

      http://www.duhaime.org/LegalDi...
      Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal

      When two business have algorithms, and they key off of each other's behavior to result in both picking a higher price -- (Q1) do the two business or their two algorithms constitute a combination? (Q2) does it restrain trade/commerce?

      Well, really we should be looking at the anti-trust case law rather than the statute. Here I have no idea.

    15. Re:Collusion? by omnichad · · Score: 1

      But if you set your initial price to $6, and the competitor raises their price to match, that is closer to what is happening. The price that settles is one of one-upping until something gives. And since the AI bots are set to maximize profit, they will not undercut each other as a primary strategy unless sales numbers start dropping. If the competitor used a similar AI, you get the same behavior on both sides.

    16. Re:Collusion? by Actually,+I+do+RTFA · · Score: 1

      Except that when people do not communicate with each other, I don't believe that it can be said to be colluding, by definition.

      P

      The federal government, specifically the FTC, disagrees with you. Collusion just requires that two companies agree to set prices, no communication is required. This agreement can be inferred from behavior. There are lots of examples from other posters (such as the airlines in the 1970's).

      It makes sense that algorithms would collude... it's well known that algorithms can establish subtle communication with each other as they evolve, and collusion is the most efficient way to set prices.

      --
      Your ad here. Ask me how!
    17. Re:Collusion? by budsetr · · Score: 2

      Posting your prices where your competitor (or anyone) can see it IS communication.

    18. Re:Collusion? by dryeo · · Score: 5, Insightful

      It's a good example of how the market does not always result in the cheapest prices.

      --
      https://en.wikipedia.org/wiki/Inverted_totalitarianism
    19. Re:Collusion? by RhettLivingston · · Score: 2

      I had the same thought. It seems that many businesses are no longer doing their best to put their competition out of business in order to increase profits. Instead, they concentrate on ways to increase profits through internal changes without changes in sales. Many also no longer push to innovate. R&D cost money. I guess it is much easier to effect the stock on 3-month timeframes when you just silently agree to a truce with your competition and work on reducing internal costs and using accounting tricks to increase profit.

    20. Re:Collusion? by cwatts · · Score: 1

      My sentiments exactly... Agreement sans collusion is clearly possible.

      (see what i did there?)
      csw

      google sez; secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others.

      --
      chris watts íë¦ìS ì(TM)ì
    21. Re:Collusion? by cwatts · · Score: 1

      In this case, it would only be collusion if the algorithms shared data privately between themselves, rather than scraping the competitors' pricing from their 'gas station signs'. If the AIs are getting the same data as the general public, it's a free market, right? Or am i missing something?

      cw

      --
      chris watts íë¦ìS ì(TM)ì
    22. Re:Collusion? by cwatts · · Score: 1

      And when you raise your price to $10, i (or my algorithm) will sell smokies for $4, and I'll buy another smokie cart to place on a nearby corner... yours!

      And the $10 smokie vendor goes out of business.

      This is the more likely scenario. Doesn't seem anti-consumer to me!

      cw

      --
      chris watts íë¦ìS ì(TM)ì
    23. Re:Collusion? by mrfaithful · · Score: 1

      That opens the door to a new game. Consumers deliberately crashing the market. A consumer can open up a new store and advertise items at a steep discount, never intending to actually ship anything. Such a store could even take orders and refund them "later".

      I assume that's why Amazon has tiers of marketplace sellers. Anyone can open a seller account and start listing products subject to a cursory review of your listings, but you are just an "also sold by" that you have to click through. It's not until you've provably sent items using real shipping companies and collected real money that eventually you get promoted to a real seller. It's only then that you get to have your prices matter to Amazon's algorithm.

      And by the time you've achieved that, well now you are a real business with skin in the game so why would you tank your company to save £100 on some purchases?

    24. Re:Collusion? by mpercy · · Score: 1

      Sure, but it's open communication not secret and not anti-competitive, indeed it may stem from competition.

      Consider two gas stations on opposite corners. Imagine that they are owned by two people who vigorously hate each other on a personal level, to the extent that they would piss on the other if he were on fire, let alone do anything that might help the other's business succeed or even get ahead. So as soon as one station changes prices on its signs and pumps, the other owner immediately runs out and changes his prices to exactly the same thing. Up or down, doesn't matter. If one lowers prices in hopes to get a bit more volume the other cuts him off but lowering his prices. If one raises prices in hopes of getting a penny or two more per gallon of profit, the other raises his too, lest the other make more money. If one runs some service promotion, the other will match it. Etc.

      The word around town is that both stations provide excellent service (neither wants a bad reputation) and both provide excellent value, always a few cents cheaper than other stations in town. So it's obviously a good situation for consumers.

      There's no collusion, there's no agreement between them, they are fiercely and vehemently competing with each other but their prices remain in lock-step.

      They are blindly following their "algorithm" based on their visceral hatred of each other and their competitive nature.

    25. Re:Collusion? by Actually,+I+do+RTFA · · Score: 1

      You're missing something. Getting information from the signs would be "inferred from conduct". The line there is tricky, but doable. Imagine an algorithm that raises prices by a penny/gallon. If all its competitors follow suit, it waits 5 minutes and then raises prices again. If not, it lowers its price by a penny (back to where it was) and sleeps for a day or until a competitor raises prices by a penny. That is colluding.

      --
      Your ad here. Ask me how!
    26. Re:Collusion? by Shaitan · · Score: 1

      I don't work in that industry so there could be something happening I'm not aware of. That said you picked a perfect example. I did actually have a friend who managed a gas station as a kid and I'd hang out there so I saw a bit of this and he told me about a bit of it.

      They didn't independently come up with their prices or rather someone flinched and set a price first and they'd shave pennies back and forth periodically when one another reduced price. He'd literally step outside and glance at the other guys sign and then respond. A couple months later he told me they'd mostly stopped, they'd just match whichever went lower instead of undercutting. I suppose that would be the point where yes, they began to collude to their mutual benefit and to the detriment of consumers.

      You can watch the same thing in action on shark tank. The sharks avoid competing with each other too far or getting in a bidding war. They are colluding.

    27. Re:Collusion? by Shaitan · · Score: 1

      Let me clarify though, the sharks might together represent a monopoly within that room and within a bubble be colluding to demonstrate the concept but they don't have any sort of monopoly on investing even in aggregate.

      The same for my friend and the gas station across the street. The real collusion there as far as I know comes from the commodities market rather than a gas station and only impacts them indirectly.

    28. Re:Collusion? by budsetr · · Score: 1

      Ok you required communication and intent. We have proven communication and now you have proven intent: "If one raises prices in hopes of getting a penny or two more per gallon of profit, the other raises his too, lest the other make more money." They intend to raise prices for profit. Collusion

    29. Re:Collusion? by mpercy · · Score: 1

      Ok, sure, fine, whatever.

  2. Collusion? by mpercy · · Score: 5, Insightful

    "That is, they may learn to collude even if they have not been specifically instructed to do so, and even if they do not communicate with one another."

    I think collusion pretty much requires communication and intent.

    Independent algorithms (or people) arriving at the same conclusion from the same data and openly performing actions in their own self-interest without communication is not collusion.

    Their actions may look like collusion from the outside, but they fail on most commonly accepted definitions of the word.

    E.g. wikipedia

    "Collusion is an agreement between two or more parties, sometimes illegal–but always secretive–to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair market advantage. It is an agreement among firms or individuals to divide a market, set prices, limit production or limit opportunities."

  3. Headline by 110010001000 · · Score: 1

    Headline: "Left To Their Own Devices, Pricing Algorithms Resort To Collusion"
    Summary: "That is, they may learn to collude even if they have not been specifically instructed to do so"

    Classic 2019 journalism right there.

    1. Re:Headline by Impy+the+Impiuos+Imp · · Score: 1

      In game theory, you can find your way out of things like the prisoner's dilemma by assuming the other person is rational and will work with you on what are obvious next steps for both sides, to both sides.

      But this isn't collusion as nobody is making plans with anybody else.

      --
      (-1: Post disagrees with my already-settled worldview) is not a valid mod option.
    2. Re:Headline by g01d4 · · Score: 1

      I think this is a type of prisoner's dilemma with each algorithm starting or arriving at the conclusion that the other algorithm is 'rational' in terms of maintaining a higher price. The issue is that the algorithm does not take into account the consumer's benefit which society, in the form of commerce regulation laws, require of it (theoretically). So while it's relatively rational to agree on maintaining a higher price it's still (theoretically) illegal and thus the agreement effectively becomes de facto collusion.

    3. Re:Headline by Rockoon · · Score: 1

      So while it's relatively rational to agree on maintaining a higher price....

      Maintaining a higher price than what?

      This is a key point and everyone seems to be missing it.

      All other things being equal, there is an optimal price and that doesnt mean 'higher' as although it could be higher, it could also be lower..

      Charging a non-optimal price is sub-optimal by definition, and on those grounds it is bad, but of course sometimes a company can get away with benefiting from sub-optimal pricing when the flaw in their pricing does not get exploited by other players.

      Here we are talking about online retail. Correct me if I am wrong but online retailers are a dime-a-dozen. Sure there are some big players, like Amazon and even NewEgg, but there are also plenty of smaller players.

      Now, presenting different consumers with different prices for the same items isnt new either. This is called A/B testing and its done all the time. Something new here is segmentation of the market down to the individual instead of a region.

      I posit that these algorithms are not learning to collude with each other, that instead they are learning which people will pay more, and its the same people. Thus, the outrage here is not the nonexistent "collusion", the outrage here is the ability of a machine to reliably figure out who the suckers are.

      --
      "His name was James Damore."
  4. How is that different? by Shaitan · · Score: 2

    "That is, they may learn to collude even if they have not been specifically instructed to do so, and even if they do not communicate with one another."

    Sounds like the situation we have with major companies now.

  5. Collusion by sdinfoserv · · Score: 1

    Left To Their Own Devices, Pricing Algorithms Resort To Collusion
    Left To Their Own Devices, Corporations Resort To Collusion
    Left To Their Own Devices, Politicians Resort To Collusion
    Left To Their Own Devices,___________ Resort To Collusion ... fill in the blank with pretty much anything, and don't be surprised.

  6. intent? by supernova87a · · Score: 1

    How do you distinguish collusion from algorithms simply figuring out the market price given buyer/seller volume, and realizing there's no benefit in deviating from that?

    1. Re:intent? by AHuxley · · Score: 1

      A make profit number would be the point to stop most of the discount for existing and returning users.
      Then add in a loss leader algorithm for people who use another brand? Who have never used a brand? Who need to see a much lower number to consider a change.
      Once they are stuck with the brand the prices go up and the discounts are ever as good.
      Lots of ways to do the math depending on the person detected who is looking for something new.

      --
      Domestic spying is now "Benign Information Gathering"
    2. Re:intent? by aybiss · · Score: 1

      In capitalism you charge as much as the market can bear. A make profit number would be communism.

      --
      It's OK Bender, there's no such thing as 2.
  7. the 1970s called... by goombah99 · · Score: 5, Informative

    There's case studies many economics classes use of how the airlines in the 1970s would evade the collusion in restraint of trade laws. Basically, they developed a process for proposing fare changes. They would announce a scheduled fare increase a month in advance. If the other company followed suit they would enact it if they didn't they would retract it or post a fare decrease shortly after that.
    It worked quite well till the regulators figured it out. Braniff (deceased high end airline) was the ringleader.

    These pricing algorithms just accomplish this one time scales of hours rather than months.

    but it's just old wine in new bottles. No one invented anything or changed anything. But the amplification and universality of it made the problem worse.

    But what actually makes this interesting is that it may also be an emergent behavior as opposed to either intentional programming or an untended artifact of some algorithm. THat is, if an AI is simply asked to maximize profit in a multi-agent system it's entirely possible it will learn this tit for tat strategy. Humans do in cooperation-games in behavior theory.

    --
    Some drink at the fountain of knowledge. Others just gargle.
    1. Re:the 1970s called... by Anonymous Coward · · Score: 1

      They would announce a scheduled fare increase a month in advance.

      That is literally the exact opposite of not communicating.

      These pricing algorithms just accomplish this one time scales of hours rather than months.

      The algorithms are posting publicly (well, publicly to other algorithms) their intent to raise the price of a product within the next hour? And if no other algorithm also posts intent to do so then the first algorithm does not change their price?

    2. Re:the 1970s called... by pr0fessor · · Score: 1

      It makes me think of those items they list for a penny with a $15 shipping and handling charge but it is usually $12.99. You know they just want to get it to the top of the list and will just make up all the money in shipping and handling.

    3. Re:the 1970s called... by Registered+Coward+v2 · · Score: 1

      IIRC, they had an FU fare code for when a competitor posted a trally low gare and they matched it. Braniff, the home of the great pickle.

      --
      I'm a consultant - I convert gibberish into cash-flow.
    4. Re:the 1970s called... by logicnazi · · Score: 2

      Actually, I suspect it isn't even worse. The airline situation in the 70s was discovered and proved because it was so obvious.

      For instance there are a number of studies now showing the cross ownership (one mutual fund owning many companies in a market) substantially decreases competition even when there is never any easily observed collusion or signalling like you describe.

      This suggests humans have a wide range of subtle communications channels they can use and don't even need to be aware that they are colluding to accomplish the same results (they can just be thinking hey, it would be great if we could raise rates let me try and guess if my competitor would undercut me if i did so). So I strongly suspect that such price collusion is already happening and algorithms make it no worse.

      --

      If you liked this thought maybe you would find my blog nice too:

    5. Re:the 1970s called... by careysub · · Score: 1

      But what actually makes this interesting is that it may also be an emergent behavior as opposed to either intentional programming or an untended artifact of some algorithm

      This is quite common in machine learning task optimization. Algorithms often find out that the best ways to "win" is to game the system - for example discovering flaws in models of the world and exploiting those instead of solving the intended problem.

      --
      Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
    6. Re:the 1970s called... by careysub · · Score: 1

      So I strongly suspect that such price collusion is already happening and algorithms make it no worse.

      The first half of your statement is reasonable.

      Care to explain how you support the second half wherein you posit that automating a process so that it happens much faster, more ubiquitously, with far more data than a human can process causes you to conclude that it must be "no worse"?

      --
      Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
    7. Re:the 1970s called... by n3r0.m4dski11z · · Score: 1

      "So I strongly suspect that such price collusion is already happening and algorithms make it no worse."

      Super intelligent machines are no worse than a few bumbling airline employees from the 70s?

      --
      -
  8. Collusion or not by nehumanuscrede · · Score: 1

    It's pretty obvious Amazon adjusts at least some of their pricing based on customers past purchasing history and / or habits.

    It explains why an .mp3 download will cost me $1.25 when the exact same download will cost .99 for someone else who doesn't normally download music from Amazon.

    1. Re:Collusion or not by slacktide · · Score: 3, Informative

      No, it's pretty obvious that Amazon DOES NOT adjust adjust pricing on a per-consumer basis, and they do not use your past purchasing history to set pricing specific to you. If they did, then sites like camelcamelcamel would not work. Amazon does adjust pricing over time, but at any given time, all buyers are offered the same price.

    2. Re:Collusion or not by mrfaithful · · Score: 1

      Amazon got slapped down for doing customer specific pricing a long time ago. I don't remember it well, but I think they went the other way. They were advertising an item at $10, but if you were someone they thought *might* be interested with an incentive they'd show you $9.50 to try and make the sale whereas if you were more likely to buy it normally you still saw $10.

      Source

  9. Wrong word by jbmartin6 · · Score: 4, Interesting

    That is called equilibrium, not collusion. There once was a similar state in the US with breakfast cereals for a while, until one of the participants decided to break the equilibrium and lower prices to try to gain market share.

    --
    This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
  10. Competition by Vanyle · · Score: 1

    Sounds like I need to go into business with a algorithm that simply undercuts all of them by a penny.

  11. Does Amazon use Agorithic Price Seting? by Streetlight · · Score: 1

    I was wondering about this as I can look up the price of an item, and a few days latter after considering the purchase, the price has increased.

    --
    In a time of universal deceit, telling the truth is a revolutionary act. George Orwell
    1. Re:Does Amazon use Agorithic Price Seting? by liquid_schwartz · · Score: 1

      I've seen this too. One of many reasons to be careful what you buy off Amazon vs other sources.

  12. Re:Game Theory by viperidaenz · · Score: 1

    Unless you notice that your sales don't decrease when your price is 2c above the competition, but your profit increases 2c.
    Then your competition does the same.
    Then you do it again. ...
    Then profit.

  13. Re:Someone doesn't know the definition of COLLUSIO by viperidaenz · · Score: 2

    The algorithms are communicating with each other through the prices they constantly alter.

  14. Re:Game Theory by swilver · · Score: 1

    Then the competition lowers it by $1, and sucks up all the sales for even more proift.
    Then you do it...
    Then the competition makes a deal with you to not undercut each other...

  15. Jet.com does this all the time by known_coward_69 · · Score: 1

    Their price for a certain brand of bottled water varies daily. Sometimes it goes up by 50% or so from the week before. They scrap amazon prices and price it the same.

  16. Missed opportunity? or sane reporting? by Fly+Swatter · · Score: 1

    No mention of AI, I am shocked - and pleased. I have benefited from Amazon algorithm pricing wars at least once, the 3rd party's algorithm kept dropping the price to 3 cents under Amazon, and Amazon countered to simply match that new price each time. Within a day the price fell to my price point.

  17. Tttttt by Impy+the+Impiuos+Imp · · Score: 1

    If you set prices similar to a competitor's, that's not colluding.

    Keep in mind these people will throw you in jail if you price too low.

    Regulator: It's about fair competition.

    Senator: i got my legal donation out of it. Ease off, we are concerned with something else now.

    --
    (-1: Post disagrees with my already-settled worldview) is not a valid mod option.
  18. "Not buying" is always an option by ffkom · · Score: 1

    Many people seem to assume that potential customers are powerless against price collusion - but they are not. "Not buying" is almost always an option, so just show sellers of things you consider overpriced the finger and do not buy.

    After some time, either those who fixed prices will notice their revenue goes downhill, or somebody will realize there is a market gap to fill when offering at a lower price.

    There are plenty of things that I never bought all my life, for the simple reason that I do not consider them worth the price they are offered at (like built-in navigation systems for cars).

    1. Re:"Not buying" is always an option by fluffernutter · · Score: 1

      So I shouldn't buy a washer or dryer? Dishwasher? Stove? No car, no smartphone..

      --
      Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
    2. Re:"Not buying" is always an option by ffkom · · Score: 1

      So I shouldn't buy a washer or dryer? Dishwasher? Stove? No car, no smartphone..

      If you have reason to believe that they are overpriced due to price fixing or "collusion", then yes, do not buy them.

      I own a dishwasher, a washing machine, a stove and a smartphone, and I cannot say I saw any indication of them being overpriced - in fact all these household appliances where available at prices ranging from ~ 100 to 3000 Euros, so not much "fixing" but great flexibility in terms of different offerings from many different manufacturers.

      I do not own a dryer or a car, but because I have no need for them, not because I see indications of their prices being fixed.

    3. Re:"Not buying" is always an option by fluffernutter · · Score: 1

      Of course it is collusion. Every manufacturer makes a few price points and the features across each price point are the same. There is no manufacturer with a more full-features washing machine at the price of a basic one from other brands.

      --
      Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
    4. Re:"Not buying" is always an option by ffkom · · Score: 1

      Seriously? There are pretty feature-complete washing machines sold for < 200,- EUR, here's a link to a manual of one, what do you miss? https://data2.manualslib.com/p...

  19. Nothign new by fluffernutter · · Score: 1

    So exactly what happens now when competing companies price things; except on an accelerated scale.

    --
    Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
    1. Re:Nothign new by Opportunist · · Score: 1

      The difference is that you can jail an AI even less than a corporation.

      --
      We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
  20. Re:Someone doesn't know the definition of COLLUSIO by Riceballsan · · Score: 1

    Reminds me of the super pac "co-ordination" things that were brought up all the time. IE a candidate would break the law if he sent an e-mail to the superpac saying "can you run some ads in floridia", but they can go on television and say "I hope my superpac runs ads in Florida".

  21. Re:Game Theory by viperidaenz · · Score: 1

    These are real time systems though, acting faster than the customers. As soon as the competition lowers their price, you follow suit. The result is neither side makes more profit, so they learn not to do that in the future.

  22. What? by kenh · · Score: 1

    A new study shows how easy it would be for price-setting algorithms to learn to collude with each other and keep prices at a disadvantage for customers.

    Not that it is happening, not that they ARE actually colluding, only that it would be easy to do...

    Why can't the headlines match the story?

    --
    Ken
  23. No, it's not equilibrium by BankRobberMBA · · Score: 2

    Equilibrium is when disparate forces in a market reach a balance point, not when 'competitors' refuse to compete. The cereal problem you mentioned was a classic case of refusing to compete. FTC watched those guys for YEARS trying to catch them communicating.

    An example of an equilibrium is when prices go low enough that it becomes uneconomical for some participants to stay in the market if prices go any lower, but there is also not enough profit in the market to entice any new entrant (who faces barriers to entry), so prices and market participants stabilize. This is usually a sign of strong competition.

    The diagnostic symptom of a cartel (either communicating or not) is sellers making economic profits (as opposed to accounting profits) for a sustained period of time. Economic profits are profits after deducting opportunity costs. If it's more than one company, you are looking at a cartel. If it's only one company, you're looking at a monopoly.

    1. Re:No, it's not equilibrium by jbmartin6 · · Score: 1

      That's the definition of economic equilibrium, as used by economists, sure. But the states TFA and I described are also states of equilibrium.

      --
      This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
  24. Amazon, Walmart, Target by ayesnymous · · Score: 1

    On numerous occasions, I have seen a product on Amazon with the same price on Walmart and/or Target. Then I'll see the price change on Amazon, and lo and behold the price also changed to that same price on Walmart/Target.

  25. Automation does not stop at your job by Opportunist · · Score: 1

    So now AI is already able to fully replace CFOs and CEOs. Beware, engineers, you might be next!

    --
    We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
  26. Re:Turing test? by Opportunist · · Score: 1

    I'm more inclined to assume that the average CEO fails it.

    --
    We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
  27. No fucking problem by temcat · · Score: 1

    If the price is too high, I just don't buy.

  28. Like it's something new by holophrastic · · Score: 1

    Why do we keep presenting this sort of AI non-sense as a new concept? We've had price-fixing, collusion, anti-competitive behaviour, insider trading, price gouging, and myriad other names for exactly the same thing.

    It's never been difficult to rip people off.

    It's been illegal.

    That's it.

    It still is illegal.

    Start arresting people.