Things like this are how Soylent Green will happen without anyone actually realizing it.
Artificial intelligence, algorithmic pricing, and collusion
11–20 of 57 posts
Re: Artificial intelligence, algorithmic pricing, and collusion
#12I heard from a friend Amazon dolling out tons of cash to their team of PhDs so they can design automated pricing for certain customers
Re: Artificial intelligence, algorithmic pricing, and collusion
#13But people will compare prices, and alert the media/friends when they find discrepancies. I've seen the narrative change in the last few years, Fast food was deemed low cost, but a Calorie Per Dollar comparison showed that eating fast food is significant more expensive. If a single company doesn't play by the rules, the world will be aware of the price difference.
This assumes competitive markets which allow them to do anything about it. For example (in the U.S. at least), when your local cable company raises prices for Internet services that effectively signals to the local telco that they can too. Sure, the market notices this but has few, if any, other options. (a big assumption is that you even have the option of both cable and telco ISP service in your area.) If all it takes to end up in this situation are NN's learning that implicit collusion is good for profitability, I'd argue that it really isn't a competitive market.
Re: Artificial intelligence, algorithmic pricing, and collusion
#14But people will compare prices, and alert the media/friends when they find discrepancies. I've seen the narrative change in the last few years, Fast food was deemed low cost, but a Calorie Per Dollar comparison showed that eating fast food is significant more expensive. If a single company doesn't play by the rules, the world will be aware of the price difference.
This assumes competitive markets which allow them to do anything about it. For example (in the U.S. at least), when your local cable company raises prices for Internet services that effectively signals to the local telco that they can too. Sure, the market notices this but has few, if any, other options. (a big assumption is that you even have the option of both cable and telco ISP service in your area.) If all it ta…
True, heavily regulated government sectors struggle from this(medical for instance), but online is nearly anarchy. I don't see Amazon having ability to screw customers (forever).
And those sectors you are talking about need serious reform that the incumbents DONT want.
Re: Artificial intelligence, algorithmic pricing, and collusion
#15In the end does this matter - my cost function is to get the most possible with the least effort, but there are case statements in the function labelled "do not rob a bank".
If your AI program commits a crime in the pursuit of your goals, both of you are going to jail, just as if your agent / lawyer / employee does.
Re: Artificial intelligence, algorithmic pricing, and collusion
#16Imagine if the big world powers built computers with control over the nuclear arsenals as well as nuclear defense to have superhuman first strike and retaliation capabilities. Imagine if those computers realized that the biggest threat to peace is not the other side but the fact that humans, a warmonger species, control them. Imagine them colluding and trying to establish world control using their nuclear arsenals. G…
https://en.wikipedia.org/wiki/Colossus:_The_Forbin_Project
It's a fantastic movie I ought to rewatch one of these days...
Re: Artificial intelligence, algorithmic pricing, and collusion
#17Imagine if the big world powers built computers with control over the nuclear arsenals as well as nuclear defense to have superhuman first strike and retaliation capabilities. Imagine if those computers realized that the biggest threat to peace is not the other side but the fact that humans, a warmonger species, control them. Imagine them colluding and trying to establish world control using their nuclear arsenals. G…
Sounds like War Games + Terminator + Dr. Strangelove
Re: Artificial intelligence, algorithmic pricing, and collusion
#18"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"
No, sorry, not what collusion is. It's pretty much business school 101 that price is a terrible way to compete unless you actually have a sustainable comparable advantage on cost or supply -- most people already do this. Collusion involves an actual agreement of some sort. Even if parties are using the same software that operates with the same strategies, that's hardly different from relatively common knowledge about price competition.
edit: I love the concept, sci-fi-wise, though!
Re: Artificial intelligence, algorithmic pricing, and collusion
#19It does not even have to be AI. If there is an area where the bulk of humans contact a single agency to decide their prices for them and that agency then tells every caller the same price (adjusted for quality differences), then you will get this style of collusion.
The agency can merely claim it is doing research on competitors to set prices, which is almost true since it looks at the prices it has told others to charge before giving you a figure.
Which is exactly what is happening with rental housing, the vast bulk of which use a shared revenue management system saas.
Re: Artificial intelligence, algorithmic pricing, and collusion
#20"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" No, sorry, not what collusion is. It's pretty much business school 101 that price is a terrible way to compete unless you actually have a sustainable comparable advantage on cost or supply -- most people already do this. Collusion invol…
Different people can have different versions of the word “collusion” but the important definition is that in the law, and in most countries it does not require an explicit agreement between parties.