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What makes it collusion is the fact that others are using it as well, so the answer to your questions is yes. My understanding is that there's nothing wrong wit

What makes it collusion is the fact that others are using it as well, so the answer to your questions is yes. My understanding is that there's nothing wrong with building your own software that crawls public information and computes a price for you - the key thing is that it has to be your own, you can't distribute that software to others.

jkic47 3y ago
ate you sure it is that? after all, we all independently use the Kelley Blue book value of a car before we sell. I think there has to be some intentional and provable link that you and I agreed (colluded) to use a particular value and set a floor below which we wouldn't sell.
- dkjaudyeqooe 3y ago
  > ate you sure it is that? after all, we all independently use the Kelley Blue book value of a car before we sell. That book doesn't price individual cars, only types and the price of the actual car is open to interpretation and usually negotiation.
  - slrainka 3y ago
    The key distinction lies in how YieldStar approaches setting rental prices compared to other systems. YieldStar not only recommends rental prices by analyzing the entire inventory it oversees but also incorporates a strategy that effectively eliminates the possibility of rent negotiation with potential tenants. This approach mirrors the dynamics of the prisoner’s dilemma, a situation in game theory where individuals may not cooperate, even if it’s in their best interest to do so. However, YieldStar transcends the Nash equilibrium—the point at which no participant can benefit by changing strategies if the others remain unchanged—by stripping tenants of any bargaining power. This ensures that the rent pricing strategy is firmly controlled, without the usual back-and-forth negotiation process.
    - dkjaudyeqooe 3y ago
      The only way you can productively refuse negotiation is by knowing the price is fixed (or you have the only supply), otherwise others will take your business.
      - jprete 3y ago
        If it's widely believed that other landlords use the same pricing system as you, then that's exactly how landlords can refuse to negotiate.
    - samatman 3y ago
      This is a strange claim. How is it that software can eliminate the possibility of rent negotiation? A tenant can negotiate, or try to. How does software eliminate the possibility that this will succeed?
      - dkjaudyeqooe 3y ago
        Because the software has set the price and the landlords are using the software's price exclusively. That is why it's price fixing.
        chii 3y ago
        to me, it's not enough to show that the same algorithm or software is deciding the price. It has to be that there's some threat of punishment from the cartel against those who would lower their price from the agreed one. For example, the explicit agreement by the landlord to keep the price at the algorithmicaly calculated one, even so far as to leave vacancy (where as there wouldn't have been a vacancy if the price was lowered).
        radicality 3y ago
        There is. I forget the number, but the landlords are only allowed to disagree with the software (and give lower rent) only ~10% or so of the time. Otherwise they will be kicked off of the price fixing platform.
- vineyardmike 3y ago
  What’s missing here is that landlords agree to use the algorithm or leave the unit empty. It’s part of the TOS. So when many marker participants do this, it’s colluding.
  - AnthonyMouse 3y ago
    Wow, that's brazen if true. I don't know why anybody is even talking about algorithms. That's a contract to fix prices. It also implies that all of the landlords using it are idiots. Not only is price fixing illegal, joining the cartel is optional and costs you money for no personal advantage because you'd have to leave your units vacant instead of immediately renting them out at the higher price induced by the "selfless" idiots in the cartel.
    - jprete 3y ago
      If holding back 20% of the units in every building drives up prices by 30% - this is completely possible in something like real estate where supply is so inflexible - then each individual landlord might have a motivation to defect, but the group as a whole has a reason to cooperate. The purpose of the software is to give the coordinators visibility into who's cooperating. Note that the TOS requires a landlord to always use the algorithm's pricing decision, including leaving units empty, and requires reporting back on every lease transaction so the company can measure compliance. This really is collusion as a service.
      - mlrtime 3y ago
        I agree, but one missing component is how many housing units are represented by this software in a given market. If everything here is true [price fixing] but the number of units is small 20%, it still won't work. Consumers will go to the 80% where the actual market lives. Now maybe someone better at economics can tell me how many units does it take to shift the market? 50%?
nerdponx 3y ago
It's an interesting area because the line might be fuzzy. It's not reasonable to expect every landlord to become a data analyst or statistician! So naturally there's a market for a product that helps landlords make data-driven pricing decisions. I'm sure the big landlords know exactly what they're doing, but I suspect that the smaller landlords don't even realize they are participating in a price-fixing cartel. As an interesting point of comparison, consider that the Zillow "zestimate" is also an algorithmic price recommendation, shared by all market participants. What's the difference there? Is it that buyers and sellers can both use the same algorithm freely? I want to make very clear that I think price-fixing is bad and that I believe extremely high real estate prices are at the root of a large and growing amount of misery in Western economies and societies. But I'm also cautious of pursuing thoughtless regulation that hurts small businesses, to the advantage of the big businesses that are causing all the problems in the first place.
- kllrnohj 3y ago
  > It's not reasonable to expect every landlord to become a data analyst or statistician! Why not? It's what they did just fine for thousands of years. What fundamentally changed in the last 20 years that makes it impossible for landlords to determine their own price?
  - damontal 3y ago
    Sounds like they’re determining their own price with the technology that’s available.
    - kllrnohj 3y ago
      They aren't, they're outsourcing pricing to a 3rd party knowing that the same 3rd party is doing everyone else's pricing decisions as well.
  - Geisterde 3y ago
    Specialization, how much time out of my day do I have to worry about the price, if I am dealing with the city trying to get the water fixed, or repaving the driveway, or handling customer complaints? It can be more efficient to pay a modest sum to arrive at the right result, or, more profitable to actively watch the market and adjust pricing, but that costs time/money, so itd better be worth it.
casualscience 3y ago
My understanding is that further than just using software, the software is optimizing to increase maximum profits for the industry by causing a cartel block of people who won't lower prices. Any individual can go out there and build a model for the rent price, the issue comes in when that model is able to coordinate everyone to keep the prices high and discourage competition/undercutting.
- koliber 3y ago
  You seem to hit the crux. There is a blurry line here and I had a hard time seeing where it really divides legal and illegal until your comment. Showing that the average rent is this, the min and max are that, and the percentiles look like this is probably legal. Showing historical trends is also legal. Recommending a certain rent based on a single shared algorithm used by all the players begins to cross that line.
  - avarun 3y ago
    Especially when it uses material non-public information in order to do so.
    - trogdor 3y ago
      Using material non-public information to set prices is not illegal. Colluding with other sellers to fix prices is illegal. That is the issue here.
  - casualscience 3y ago
    Yes exactly. I think it's an interesting case. Where/how do you legislate this? Is it based on intent (you literally are training your model to be cooperative), or is it based on effect (your company is having this effect regardless of their intent -- e.g. Zillow might also be offending). Both of these will be hard to show in practice.
- Geisterde 3y ago
  Except, setting higher prices doesnt discouage competition, it encourages it. It makes it far more profitable to undercut anyone foolish enough to buy into this strategy.
jkoudys 3y ago
Which makes this a great example of the shittiest side of "AI": not as software techniques to detect patterns and relationships, but as a method for obfuscating your sources. This software really is just saying "don't price fix by talking to eachother, price fix by having it done on our platform for you."
soerxpso 3y ago
I see how this is illegal when it's using a single centralized platform that everyone implicitly agrees on. However, I have a hypothetical that I'm curious about: Individually, without speaking, every landlord decides that it's in their best interest to charge the highest (per square foot) price that a nearby property is charging. They also all individually understand that if they leave units vacant instead of undercutting eachother, the market impact in favor of their interests will be sufficiently positive to justify the lost immediate revenue, and they trust (blindly) that no landlords will defect from this prisoner's dilemma. There's no communication at all; they all just understand game theory and have blind trust in their fellow landlords. This would have the exact same material impact on renters. The only difference is that it's slightly harder to pull off. Is it illegal, and should it be illegal?
- jprete 3y ago
  Landlords will undercut left and right because the benefits are local while the drawbacks are mostly distributed to competitors.
- mlrtime 3y ago
  These examples are covered in high school level economics classes. All it takes is one landlord to have a slightly different concern to change their strategy. They need money fast, so they drop the price to get a tenant, boom competition.

jkic47 3y ago

ate you sure it is that? after all, we all independently use the Kelley Blue book value of a car before we sell. I think there has to be some intentional and provable link that you and I agreed (colluded) to use a particular value and set a floor below which we wouldn't sell.

dkjaudyeqooe 3y ago
> ate you sure it is that? after all, we all independently use the Kelley Blue book value of a car before we sell. That book doesn't price individual cars, only types and the price of the actual car is open to interpretation and usually negotiation.
- slrainka 3y ago
  The key distinction lies in how YieldStar approaches setting rental prices compared to other systems. YieldStar not only recommends rental prices by analyzing the entire inventory it oversees but also incorporates a strategy that effectively eliminates the possibility of rent negotiation with potential tenants. This approach mirrors the dynamics of the prisoner’s dilemma, a situation in game theory where individuals may not cooperate, even if it’s in their best interest to do so. However, YieldStar transcends the Nash equilibrium—the point at which no participant can benefit by changing strategies if the others remain unchanged—by stripping tenants of any bargaining power. This ensures that the rent pricing strategy is firmly controlled, without the usual back-and-forth negotiation process.
  - dkjaudyeqooe 3y ago
    The only way you can productively refuse negotiation is by knowing the price is fixed (or you have the only supply), otherwise others will take your business.
    - jprete 3y ago
      If it's widely believed that other landlords use the same pricing system as you, then that's exactly how landlords can refuse to negotiate.
  - samatman 3y ago
    This is a strange claim. How is it that software can eliminate the possibility of rent negotiation? A tenant can negotiate, or try to. How does software eliminate the possibility that this will succeed?
    - dkjaudyeqooe 3y ago
      Because the software has set the price and the landlords are using the software's price exclusively. That is why it's price fixing.
      - chii 3y ago
        to me, it's not enough to show that the same algorithm or software is deciding the price. It has to be that there's some threat of punishment from the cartel against those who would lower their price from the agreed one. For example, the explicit agreement by the landlord to keep the price at the algorithmicaly calculated one, even so far as to leave vacancy (where as there wouldn't have been a vacancy if the price was lowered).
        radicality 3y ago
        There is. I forget the number, but the landlords are only allowed to disagree with the software (and give lower rent) only ~10% or so of the time. Otherwise they will be kicked off of the price fixing platform.
vineyardmike 3y ago
What’s missing here is that landlords agree to use the algorithm or leave the unit empty. It’s part of the TOS. So when many marker participants do this, it’s colluding.
- AnthonyMouse 3y ago
  Wow, that's brazen if true. I don't know why anybody is even talking about algorithms. That's a contract to fix prices. It also implies that all of the landlords using it are idiots. Not only is price fixing illegal, joining the cartel is optional and costs you money for no personal advantage because you'd have to leave your units vacant instead of immediately renting them out at the higher price induced by the "selfless" idiots in the cartel.
  - jprete 3y ago
    If holding back 20% of the units in every building drives up prices by 30% - this is completely possible in something like real estate where supply is so inflexible - then each individual landlord might have a motivation to defect, but the group as a whole has a reason to cooperate. The purpose of the software is to give the coordinators visibility into who's cooperating. Note that the TOS requires a landlord to always use the algorithm's pricing decision, including leaving units empty, and requires reporting back on every lease transaction so the company can measure compliance. This really is collusion as a service.
    - mlrtime 3y ago
      I agree, but one missing component is how many housing units are represented by this software in a given market. If everything here is true [price fixing] but the number of units is small 20%, it still won't work. Consumers will go to the 80% where the actual market lives. Now maybe someone better at economics can tell me how many units does it take to shift the market? 50%?

nerdponx 3y ago

It's an interesting area because the line might be fuzzy. It's not reasonable to expect every landlord to become a data analyst or statistician! So naturally there's a market for a product that helps landlords make data-driven pricing decisions. I'm sure the big landlords know exactly what they're doing, but I suspect that the smaller landlords don't even realize they are participating in a price-fixing cartel. As an interesting point of comparison, consider that the Zillow "zestimate" is also an algorithmic price recommendation, shared by all market participants. What's the difference there? Is it that buyers and sellers can both use the same algorithm freely? I want to make very clear that I think price-fixing is bad and that I believe extremely high real estate prices are at the root of a large and growing amount of misery in Western economies and societies. But I'm also cautious of pursuing thoughtless regulation that hurts small businesses, to the advantage of the big businesses that are causing all the problems in the first place.

kllrnohj 3y ago
> It's not reasonable to expect every landlord to become a data analyst or statistician! Why not? It's what they did just fine for thousands of years. What fundamentally changed in the last 20 years that makes it impossible for landlords to determine their own price?
- damontal 3y ago
  Sounds like they’re determining their own price with the technology that’s available.
  - kllrnohj 3y ago
    They aren't, they're outsourcing pricing to a 3rd party knowing that the same 3rd party is doing everyone else's pricing decisions as well.
- Geisterde 3y ago
  Specialization, how much time out of my day do I have to worry about the price, if I am dealing with the city trying to get the water fixed, or repaving the driveway, or handling customer complaints? It can be more efficient to pay a modest sum to arrive at the right result, or, more profitable to actively watch the market and adjust pricing, but that costs time/money, so itd better be worth it.

casualscience 3y ago

My understanding is that further than just using software, the software is optimizing to increase maximum profits for the industry by causing a cartel block of people who won't lower prices. Any individual can go out there and build a model for the rent price, the issue comes in when that model is able to coordinate everyone to keep the prices high and discourage competition/undercutting.

koliber 3y ago
You seem to hit the crux. There is a blurry line here and I had a hard time seeing where it really divides legal and illegal until your comment. Showing that the average rent is this, the min and max are that, and the percentiles look like this is probably legal. Showing historical trends is also legal. Recommending a certain rent based on a single shared algorithm used by all the players begins to cross that line.
- avarun 3y ago
  Especially when it uses material non-public information in order to do so.
  - trogdor 3y ago
    Using material non-public information to set prices is not illegal. Colluding with other sellers to fix prices is illegal. That is the issue here.
- casualscience 3y ago
  Yes exactly. I think it's an interesting case. Where/how do you legislate this? Is it based on intent (you literally are training your model to be cooperative), or is it based on effect (your company is having this effect regardless of their intent -- e.g. Zillow might also be offending). Both of these will be hard to show in practice.
Geisterde 3y ago
Except, setting higher prices doesnt discouage competition, it encourages it. It makes it far more profitable to undercut anyone foolish enough to buy into this strategy.

jkoudys 3y ago

Which makes this a great example of the shittiest side of "AI": not as software techniques to detect patterns and relationships, but as a method for obfuscating your sources. This software really is just saying "don't price fix by talking to eachother, price fix by having it done on our platform for you."

soerxpso 3y ago

I see how this is illegal when it's using a single centralized platform that everyone implicitly agrees on. However, I have a hypothetical that I'm curious about: Individually, without speaking, every landlord decides that it's in their best interest to charge the highest (per square foot) price that a nearby property is charging. They also all individually understand that if they leave units vacant instead of undercutting eachother, the market impact in favor of their interests will be sufficiently positive to justify the lost immediate revenue, and they trust (blindly) that no landlords will defect from this prisoner's dilemma. There's no communication at all; they all just understand game theory and have blind trust in their fellow landlords. This would have the exact same material impact on renters. The only difference is that it's slightly harder to pull off. Is it illegal, and should it be illegal?

jprete 3y ago
Landlords will undercut left and right because the benefits are local while the drawbacks are mostly distributed to competitors.
mlrtime 3y ago
These examples are covered in high school level economics classes. All it takes is one landlord to have a slightly different concern to change their strategy. They need money fast, so they drop the price to get a tenant, boom competition.