The game theory of how algorithms can drive up prices

Post by Arwill » Thu, Oct 23, 2025, 5:37 PM UTC

shmatt wrote: post #71

zaphar wrote: post #31

Earlier quoted context omitted.

You shouldn't lower prices as a direct reaction to your competitor. You should lower prices as a reaction to your customers willingness to buy at a given price. It's an indirect reaction but it factors in the actual market.

This actually works well the other way around. When sales are still growing YoY (like the post covid market), but prices are up 30% or 40%, you understand your customer is still willing to pay the higher price Its similar to a McDonalds or Starbucks situation where you just keep increasing prices dramatically until you get a first quarter of lower than expected sales, then you start adapting downwards Most corporatio…

Post by godelski » Thu, Oct 23, 2025, 5:40 PM UTC

Retric wrote: post #34

shafoshaf wrote: post #29

Earlier quoted context omitted.

Not flawed, but very, very complicated. The theory of free markets holds a lot of very well reasoned and tested lessons that can be instructive, depending to which principles you are referring. Newtonian principles does a really good job for a huge number of use cases, but it isn't the end all. When it comes to intertwining human taste, a doctrine of equal opportunity combined with private property, and scarce resour…

Free markets as described by Econ 101 don’t apply in any sector where advertising is useful. Far more complicated theories get much closer to reality, but aren’t nearly as well known outside of economic circles.

  > Free markets as described by Econ 101 don’t apply.

Post by RataNova » Thu, Oct 23, 2025, 5:42 PM UTC

pixl97 wrote: post #5

I mean we are in the age of digital pricing, even on the shelf. Modern price collusion is more apt to happen with A/B testing if prices at locations to see what the local market will bear. I've seen Walmart do this in the past. Items that were not on sale could have significant differences in price, where in general the prices in more affluent areas are higher. We're talking 50 to 75 cents on common items, but sporti…

Post by denimnerd42 » Thu, Oct 23, 2025, 5:48 PM UTC

sylos wrote: post #81

indoordin0saur wrote: post #61

Earlier quoted context omitted.

This works if landlords don't have significantly more units than are demanded by the population AND it is both very expensive for new units to be built and new competitors to enter the market. If enough supply comes on the market and the best move for the landlord with the additional supply would be to lower prices. Tenants then all move into the better value units and the expensive landlord is left with either empty…

Wouldn't that require a large flooding of units not attached to those landlords? And considering they already cornered the market on the "old" units, unless this market disrupting supply of units is owned by someone generous, they'll just match the old prices and call it a win.

Post by indoordin0saur » Thu, Oct 23, 2025, 5:49 PM UTC

denimnerd42 wrote: post #97

sylos wrote: post #81

Earlier quoted context omitted.

Wouldn't that require a large flooding of units not attached to those landlords? And considering they already cornered the market on the "old" units, unless this market disrupting supply of units is owned by someone generous, they'll just match the old prices and call it a win.

usually prices dont go down. the cost does relative to inflation. what usually happens is a new investor will do the analysis and build new units that are even more expensive but only slightly. now all the current tenants that can afford it will leave the current landlords and the current landlords wont be able to increase prices because there is a better product at that price level.