1/1/2024 0 Comments Price minboxThe impact of algorithms can be more than just a few extra dollars at checkout. "Why try to start a price war against a firm whose algorithm will see my price change and immediately undercut it," he said. This, MacKay said, takes price competition off the table. He found that when multiple businesses used pricing algorithms, both knew that decreasing their price would cause their rival to decrease their price, which could set off a never-ending chain of price decreases. In a paper he co-authored in the National Bureau of Economic Research, he studied the way algorithms compete. For example, if one business sets a price, the algorithm could automatically undercut it, resulting in a lower price for the consumer.īut it doesn't quite work that way, MacKay said. Theoretically, these algorithms could be good for competition. "A key thing about the algorithm is that given different inputs, like, say, time of day or weather or how many customers might be showing up, it might decide on a different price," said Harvard economics professor Alexander MacKay. Now, there are calls for greater regulation at a time when these tactics are expected to become more common. These are computer programs that look at factors such as supply, demand and the prices competitors are charging, and then adjust the price in real time. If you've shopped online recently, you may have had this experience: You find an item, add it to your cart, and then when you get around to paying, the price has increased.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |