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Your comment reminds me of a recent article I read (on HN iirc but can't find the comment thread): https://www.technologyreview.com/the-download/612947/pricing
by dontbenebby 8y ago
Your comment reminds me of a recent article I read (on HN iirc but can't find the comment thread):
https://www.technologyreview.com/the-download/612947/pricing-algorithms-can-learn-to-collude-with-each-other-to-raise-prices/ https://www.technologyreview.com/the-download/612947/pricing...
>Researchers at the University of Bologna in Italy created two simple reinforcement-learning-based pricing algorithms and set them loose in a controlled environment. They discovered that the two completely autonomous algorithms learned to respond to one another’s behavior and quickly pulled the price of goods above where it would have been had either operated alone.
>“What is most worrying is that the algorithms leave no trace of concerted action,” the researchers wrote. “They learn to collude purely by trial and error, with no prior knowledge of the environment in which they operate, without communicating with one another, and without being specifically designed or instructed to collude.” This risks driving up the price of goods and ultimately harming consumers.
I don't think it's out of the realm of possibility that two companies could arrive at such a move without conscious collusion. I also don't think it should be treated differently.
Long term, I think Visa an MC could shoot themselves in the foot. Merchants are now allowed to charge fees for using CCs IIRC in at least some areas.
You could easily end up with a situation like Europe where people mostly use debit cards for in person purchases since the processing fees are lower.
Consumers lose the protection of a buffer from their bank account, issuers lose out on revenue. Not a good outcome IMHO.
- jfoster 8y agoOf course. They also share most of their customers. Their business model is the same. A lot of their metrics probably trend similarly. Each would definitely know what the other is up to without talking directly.
- etrautmann 8y agoIs this essentially a variant of the "tit for tat" strategy in an iterated prisoner's dilemma? It seems analogous
- will_brown 8y agoThe prisoners dilemma is ultimately just a demonstration of game theory. That is there is more than you win/I lose or I win/you lose but there is win/win. It’s definately conceivable two algorithms or two ai would be capable of concluding the same. In fact it may be even easier because what’s the actual dilemma/self interest of such a system without the selfishness of human nature?
- roywiggins 8y agoWhy would you intentionally operate an AI that wasn't as selfish as possible?
- will_brown 8y agoBecause game theory/prisoners dilemma/the red black game (whatever you want to call it) suggests you would get a better outcome otherwise.
- 8note 8y agoif you ruin your only competitor, the antitrust folks will come after you
- pas 8y agoNah, they still can come after you if you prevent new firms to enter the market. (But if you just do the usual regulatory capture the gov. will be just happy for you, as you gave them a lot of busywork for nothing.)
- raverbashing 8y agoMy pet peeve is how "The Prisoner's dilemma" is the most commonly used example of game theory while being one of the worse examples (because it involves no information exchange and a skewed payback)
- Marsymars 8y agoAlso tragedy of the commons.
- benologist 8y agoWhat do European banks do when debit card fraud occurs?
- CydeWeys 8y agoEuropean banks use chip and PIN cards which are much less susceptible to fraud. So they're fine.
- conductr 8y agoAm I wrong to assume most fraud is online? How does Europe deal with big data breaches and the like?
- CydeWeys 8y ago2-factor auth is typically mandatory when using a chip and PIN card to buy things online. Rather than physically entering the PIN on a keypad, you're doing something through a flow using your user account with the bank. So not only would the random retailer need to be compromised, but the bank would have to be as well.
- felipelemos 8y agoIn that case what is the difference between credit and debit usage?
- benologist 8y agoArbitrary "protection" policies anyone can implement, powered by Visa and Mastercard?
- jmiserez 8y agoIn practice, here in Europe credit cards are often worse because the seller can add additional charges after the transaction using just the CC number (even with chip+pin CCs) whereas this is impossible with a chip+pin debit card. And the CC "protection policies" aren't that useful here, in my experience it's near impossible to do a successful chargeback and there are few cards with high cashback.
- nsedlet 8y agoThere was this thread from awhile ago: "Cartels Are an Emergent Phenomenon, Say Complexity Theorists" https://news.ycombinator.com/item?id=3494224 https://news.ycombinator.com/item?id=3494224