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Algorithmic pricing that learns to tacitly collude is a hot area of study in computer science and economics. For example, if you train simple online learning al
by currymj 2y ago
Algorithmic pricing that learns to tacitly collude is a hot area of study in computer science and economics. For example, if you train simple online learning algorithms to adjust prices, sometimes they can learn to keep prices high or to take turns winning customers, rather than just competing. People have found some empirical evidence of this on platforms like Amazon where a lot of small sellers use pricing bots.
However, it seems this is a more of a hybrid situation. A big part of the complaint is just all these incriminating emails and documents where RealPage appears to be coaching landlords to avoid lowering rents or giving concessions, independent of the software.
At the same time, there was an algorithmic component, which the customers appreciated: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing...”
- tyingq 2y agoInteresting as airlines have been doing this for a really long time.
- bluGill 2y agoAirlines do this internally all the time. However they do not share this information with each other.
- currymj 2y agothere is concern about tacit collusion if all the airlines start using the same pricing algorithms based on the same historical data. it doesn't even take a very smart pricing strategy for them to naturally learn to collude with each other. However I would guess you will never have an email from an airline CEO that says "I really like this product...That's classic price fixing"
- tyingq 2y agoThey don't share how many seats are left publicly, but fare changes are shared real time in a platform that distributes them. And there's quite a lot of website scraping that goes on that mostly skirts around "how many seats are left".
- dylan604 2y agonot everyone is affected by airlines' pricing though as not everyone travels. everyone needs a place to live though
- legitster 2y agoThis gets into prisoner's dilemma though. If everyone but me is using the price fixing app, I have a strong incentive to undercut them, even by just a few dollars. So without a cartel-like enforcement mechanism, there is no reason it wouldn't just fall apart naturally in the long run. In the complaint there was a mention of "compliance" which could get into that piece though.
- RhodesianHunter 2y ago>I have a strong incentive to undercut them Not in a supply constrained market where your rental will be occupied either way.
- legitster 2y agoIf your rental is $2400, and it sits on the market for 2 months, you lost potentially lost $4800. It would take a huge rent increase to justify that. It's one thing if the software is helping landlords jack up prices to the market rate. It's quite another to convince them to collude against their best interests.
- bluGill 2y agoIt is a different unit every month though as renters are moving out all the time. This isn't about 1 unit that is empty or not. It is about 100+ units where it can be 89,90, or 91 empty - if the other units that are not rented pay enough higher rent because the empty is not on the market you are better off.
- diebeforei485 2y agoSounds like removing the supply constraints would be a better strategy.
- animal_spirits 2y agoAnd supply constraints come from regulations on housing, zoning, and federal subsidies for "homeowners"