Sunday, April 24, 2011

Algorithmic pricing loop sends book prices into orbit


Say two Amazon merchants start using an algorithm to reprice their books based upon the prices set by rivals. Fine. Now say that two merchants pick one another's prices and a recursive repricing loop begins. What happens next? Perhaps you assume that the automatic price war would send prices spiraling rapidly down. In the case of Peter Lawrence's The Making of a Fly, you would be mistaken. [Michael Eisen via Hacker News]

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