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The game theory of how algorithms can drive up prices
121–130 of 146 posts
Re: The game theory of how algorithms can drive up prices
#122Earlier quoted context omitted.
Yup, and I really hate it. Monopolies and oligopolies are really terrible in just about every way imaginable. Everyone that isn't an oligopoly gets screwed. This is also simply the natural end state of free market capitalism. Every one of these giant businesses knows that by swallowing up smaller competitors they can ultimately improve their revenue without improving quality or actually innovating/competing. Companie…
it's just incredible. Internally, these huge corporations behave exactly the same as a good old fashioned USSR bureaucracy: endless meetings where no work gets done a huge class of bureaucrats (manager, senior manager, VP, senior VP, director, senior director ... what's next? commissar? secretary?) who don't actually do any of the line work and instead exist only to perpetuate a process huge amount of process that do…
The difference is that unlike USSR bureaucracy, these corporations' continued operations depend completely on the decisions (buy or not) of customers who they cannot coerce -- so their feet are far more held to the fire of market reality than totalitarian regime leaders. They do not have the power to force people not to vote with their wallets (not to mention with their feet).
As frustrating and corrupt as our market economy is, the oppression under regimes like the USSR and East Germany was unimaginably worse.
That being said, yes -- we badly need another round of legislative reform like the Sherman Antitrust Act of 1890 and all the regulatory actions that followed.
Re: The game theory of how algorithms can drive up prices
#123Earlier quoted context omitted.
Agricultural productive capacity hasn't changed that much in the past 25 years. Looking at the longer term, food prices have dropped enormously. At the beginning of the 20th century, the average American household budget was 40+% food. Today it's around 10%.
>the average American household budget was 40+% food. Today it's around 10%. Does that mean food prices have dropped enormously or could it be that families have to spend more money on eg. rent, gas, and health? Adjusting for inflation, the price of milk have only decreased 1.1%[1] [1] https://www.usinflationcalculator.com/inflation/milk-prices-...
Your link only shows back to 1995, whereas the figures you quoted are about 1901. Even using your link and 1995, milk prices dropped 15% over that period, not 1.1%.
If we look at 1901, milk was around 6 cents per quart according to https://fraser.stlouisfed.org/title/bulletin-united-states-b.... Adjusted for inflation, that's about $2.29/quart today, or $9.16/gallon. That's over twice what I pay and over twice the average according to https://fred.stlouisfed.org/series/APU0000709112.
Re: The game theory of how algorithms can drive up prices
#124The researcher says > this strange strategy will maximize your profit. “To me, it was a complete surprise” It doesn't seem like such a surprise that algorithms that use information about rivals to optimising profit tend to price high. Consider a small town with two gas stations, you own one. You can set the price (high or low) in the morning and can't change it until the next day. Your goal is to optimise profit for…
This example works well in a vacuum, but not much else. You would see people filling up outside the small town, or see a third station open up to undercut the other two. Or, there is so much overhead that the high-high price is actually the fair price. Like grocery store monopolies that are bilking people so they can reap....1-2% profit margins.
Re: The game theory of how algorithms can drive up prices
#125Earlier quoted context omitted.
I agree, but its much more complex than just forcing companies' books to be open to the public. There are all kinds of accounting tricks you can pull with complex constellations of "entities" (the jargon used by tax dodge experts for the fake companies they set up). IMO we have to retreat away from a world where anyone with a couple hundred dollars can create a corporation by filing a form. Corporate personhood shoul…
I think the idea of financial transparency should be more discussed at any level. Yes, there will be loopholes, but now the default is "money is secret, how dare you!". I would claim that democracy was an ideal at any point in time. Most people have/had insufficient education to understand all the topics. Even in more advanced countries (with better education on average) the discourse gets focused on petty issues. Th…
To be clear: I agree. There is no reason that citizens shouldn't be able to inspect every document produced by their government, listen to any conversation about any topic that involves any officials, and no reason not to extend this regime into the so-called "private sector", which is -- legally and historically -- a creation of the state, not the other way around.
If you don't like that intrusion into your finances, you are still free to do business using your own personhood, but the public won't provide you with a spare disposable one.
Re: The game theory of how algorithms can drive up prices
#126Earlier quoted context omitted.
>the average American household budget was 40+% food. Today it's around 10%. Does that mean food prices have dropped enormously or could it be that families have to spend more money on eg. rent, gas, and health? Adjusting for inflation, the price of milk have only decreased 1.1%[1] [1] https://www.usinflationcalculator.com/inflation/milk-prices-...
Your link only shows back to 1995, whereas the figures you quoted are about 1901. Even using your link and 1995, milk prices dropped 15% over that period, not 1.1%. If we look at 1901, milk was around 6 cents per quart according to https://fraser.stlouisfed.org/title/bulletin-united-states-b... . Adjusted for inflation, that's about $2.29/quart today, or $9.16/gallon. That's over twice what I pay and over twice the a…
Yes of course you can buy cheap and bad quality milk but you should strive to buy good product. Same goes for meat. If you do not invest in yourself then you are wasting money
Re: The game theory of how algorithms can drive up prices
#127"Algorithmic collusion"... If using an algorithm leads to collusion, then choosing to use the algorithm should be considered regular collusion.
Feels more like a system design failure than malice
Profiting from a design failure indefinitely isn’t malice, it’s negligence that can still be considered criminal.
Re: The game theory of how algorithms can drive up prices
#128Earlier quoted context omitted.
it's just incredible. Internally, these huge corporations behave exactly the same as a good old fashioned USSR bureaucracy: endless meetings where no work gets done a huge class of bureaucrats (manager, senior manager, VP, senior VP, director, senior director ... what's next? commissar? secretary?) who don't actually do any of the line work and instead exist only to perpetuate a process huge amount of process that do…
The difference is that unlike USSR bureaucracy, these corporations' continued operations depend completely on the decisions (buy or not) of customers who they cannot coerce -- so their feet are far more held to the fire of market reality than totalitarian regime leaders. They do not have the power to force people not to vote with their wallets (not to mention with their feet). As frustrating and corrupt as our market…
> who they cannot coerce
If the market is a consumer need then yeah, these companies can coerce simply by being the only (or one of a few) options in town. Food, healthcare, and housing are all markets that appear to be narrowing which means increasing in their coercive abilities.
It's true that the USSR and East Germany were worse, but that had a lot more to do with the concentration of power into a strongman leader rather than the people. And, in fact, a major part of why West germany did so well wasn't really due to market forces, but rather due to the US spending ungodly amounts of money on rebuilding them (and Japan). The USSR was always pretty cash strapped. Especially since the only nations they could really interact with were nations under the USSR umbrella. Even other communist nations like China had pretty tense and often not friendly relations with the USSR.
In today's money, we dumped about $120B on West Germany. Just to put things in context.
Re: The game theory of how algorithms can drive up prices
#129Earlier quoted context omitted.
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.
It does depend on where you are and how elastic supply is. In Austin for example there has been a recent decrease in rent (even relative to inflation) despite continually growing demand.
austin had such an insane explosion of supply. but they also have a price explosion just a couple years ago. probably going to see something similar with respect to GPU rentals in a couple years
Re: The game theory of how algorithms can drive up prices
#130Earlier quoted context omitted.
>Business school will tell you constantly that best quality is where you want to compete in almost all cases. Hmmmm, I don't remember it that way. I remember the constant take was to build a moat (typically based on intellectual property), then optimize net profit and/or network effects. Quality never really came up unless it is so bad as to cause lawsuits.
Yeah, it's the exact opposite: business school teaches you that you should avoid competing on price/quality at all costs and all the ways to avoid competition: network effects, platform effects, last-mile dynamics, predatory pricing, information asymmetry, etc. Of course, right after teaching you how to exploit all the bad incentives created by capitalism they teach you that the government is to blame for all bad inc…
lol, yes. In my case the "govt. is the cause of all bad incentives and just turbo-fucks the customers/markets with laws and regulations" came before all the tools that one might use to make profit. Also rent-seeking was lionized (eg. event ticket "middle-men" that purchased all the tickets and raised the prices) as fundamentally necessary to the markets along with strategies like when to use "dirty marketing" against opponents and of course there where the required ethics courses to round out the education.
Interestingly, the claim about competing on price was that it would just inevitably lead to everyone lowering their price to zero marginal cost, so you should find other ways to differentiate yourself or to use IP to sue others from not competing.