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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
by 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 agoYou 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 agoEspecially when it uses material non-public information in order to do so.
- trogdor 3y agoUsing 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 agoYes 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 agoExcept, 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.
- nottorp 3y agoYep, especially with housing. You just build more homes quickly, right across the street from the overpriced ones, and rent them for cheaper.
- tomn 3y ago"just" is doing a lot of work there. If the cartel model is profitable, then those taking part have the incentive and resources to buy up property in the areas that they operate in themselves. At least where I live, there are landlords who operate reasonably (reasonable rents, with safe and maintained properties, that respond quickly to issues), but there's so much demand relative to supply that it doesn't really affect the ones who are just trying to extract maximum profit.
- projektfu 3y agoMissing sarcasm tag on building homes quickly.
- nottorp 3y agoAlso on right across from the overpriced ones. Should have been obvious...