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Artificial intelligence, algorithmic pricing, and collusion

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Re: Artificial intelligence, algorithmic pricing, and collusion

#51

Post by Hydraulix989 »

doctorpangloss wrote: post #46
roenxi wrote: post #25

Earlier quoted context omitted.

And that observation makes the article doubly weird: 1) Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated. 2) The technical economic term for this collusion is probably something like 'efficient market price', where the sellers have agreed on what the fair price is to offer their service. Collusion can't mean that the sellers all have an implicitly coordinated price, because the ma…

> The technical economic term for this collusion is probably something like 'efficient market price' That's definitely untrue. I mean, clearly an order book shows many sellers with different opinions about what a fair price is, but it would seem reasonable that the price in between the bid and the ask is a close approximation of the efficient market price. > Collusion can't mean that the sellers all have an implicitl…

> That's definitely untrue.

I think he meant Efficient Market Hypothesis, which could be posed as a strategy.

> That's also pretty untrue, or so pedantic as to be meaningless.

It's still collusion.

> You're really stuck applying Econ 101 in one of the worst places, retail.

This is Game Theory, not Econ 101. I also think it's one of the best places.

> But sellers on Amazon? C'mon man, sellers coordinate prices via implicit information exchange on Amazon in a way that, if they were allowed to, they would just collude straightforwardly to do so.

I've seen it happen. I've even seen collusion with online reviews on there.

Re: Artificial intelligence, algorithmic pricing, and collusion

#52

Post by Hydraulix989 »

harry8 wrote: post #36
orasis wrote: post #28

Dynamic pricing developer here. The bigger problem than collusion is the arms race between higher margins and higher ad costs. In the end Facebook and Google will take almost all the margin as consumers see prices rise until they receive zero net value from their purchases.

Is there any published evidence that Goggle and Facebrick ads are actually effective? Genuine question. I don't know anybody who clicks them or takes any notice at all of them but maybe these people exist. I don't know of any company that is wholly reliant on some kind of advertising who uses them. Eg Chanel, Coca Cola etc. I do see a bunch of goog/face advertisements on tv and posters at bus stops where I do also se…

> Is there any published evidence that Goggle and Facebrick ads are actually effective?

Effective means ROI positive which is pretty easy to demonstrate.

Re: Artificial intelligence, algorithmic pricing, and collusion

#53

Post by harry8 »

Hydraulix989 wrote: post #52
harry8 wrote: post #36

Earlier quoted context omitted.

Is there any published evidence that Goggle and Facebrick ads are actually effective? Genuine question. I don't know anybody who clicks them or takes any notice at all of them but maybe these people exist. I don't know of any company that is wholly reliant on some kind of advertising who uses them. Eg Chanel, Coca Cola etc. I do see a bunch of goog/face advertisements on tv and posters at bus stops where I do also se…

> Is there any published evidence that Goggle and Facebrick ads are actually effective? Effective means ROI positive which is pretty easy to demonstrate.

This is a link to published evidence?

Re: Artificial intelligence, algorithmic pricing, and collusion

#54

Post by Hydraulix989 »

harry8 wrote: post #53
Hydraulix989 wrote: post #52

Earlier quoted context omitted.

> Is there any published evidence that Goggle and Facebrick ads are actually effective? Effective means ROI positive which is pretty easy to demonstrate.

This is a link to published evidence?

First, consider that no rational person or business would spend money on any marketing that isn't ROI positive (because then they would just be losing money).

Google and businesses aren't amenable to just sharing all of their confidential marketing data, but here's a birds' eye view:

https://economicimpact.google.com/

Re: Artificial intelligence, algorithmic pricing, and collusion

#55

Post by TomMckenny »

chii wrote: post #37
ummonk wrote: post #29

Earlier quoted context omitted.

Also what is happening with wages. Companies relying sharing their wage data with each other through in organizations like Options Impact, and effectively colluding to match each others’ comp.

> Companies relying sharing their wage data with each other If the collusion was only accidental, then an enterprising company could _just_ increase their price a tiny bit, and attract better people than their competitors.

For this to work, potential employees would have to know about it while competing employers don't.

Re: Artificial intelligence, algorithmic pricing, and collusion

#56

Post by sooheon »

roenxi wrote: post #25
pmoriarty wrote: post #10

This reminds me of the "Tit for Tat" results of simulations of the prisoners' dilemma[1][2], where cooperating strategies won over competing ones. It also reminds me of Colossus: The Forbin Project [3], a science-fiction movie from 1970 in which a supercomputer in the US and one in the Soviet Union learn to communicate with one another in ways incomprehensible to their human creators and together rule the Earth. [1]…

And that observation makes the article doubly weird: 1) Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated. 2) The technical economic term for this collusion is probably something like 'efficient market price', where the sellers have agreed on what the fair price is to offer their service. Collusion can't mean that the sellers all have an implicitly coordinated price, because the ma…

> Collusion can't mean that the sellers all have an implicitly coordinated price.

Why? Obviously explicitly coordinating prices is collusion. Implicitly coordinated prices depends on nobody else defecting to a lower price point. If enough players have a tit-for-tat strategy, sellers can converge to a higher than market price, trivially. This is far from a 'efficient market price' derived from perfect information.

Re: Artificial intelligence, algorithmic pricing, and collusion

#57

Post by harry8 »

Hydraulix989 wrote: post #54
harry8 wrote: post #53

Earlier quoted context omitted.

This is a link to published evidence?

First, consider that no rational person or business would spend money on any marketing that isn't ROI positive (because then they would just be losing money). Google and businesses aren't amenable to just sharing all of their confidential marketing data, but here's a birds' eye view: https://economicimpact.google.com/

Colour me unimpressed with a marketing document, unaudited that is literally selling the service. Without saying google are or aren't a con or having any view on it in the absence of real data, Bernie Madoff had marketing documents. There's a good reason to want, actual data.

Businesses do irrational stuff literally all the time. There is no business that has ever existed that was always wholly rational.

No data is no data...

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