5 ms·

The price descrimination that the airlines do is so opaque and manipulative, this is exactly why one needs to be cognizant of the technicals. We are really only

by 001sky 13y ago

The price descrimination that the airlines do is so opaque and manipulative, this is exactly why one needs to be cognizant of the technicals. We are really only a single logical step removed from a pretty bad place (read: racist/sexist/elitist, etc) with this teqnique to dynamic pricing and (essentially) ... front-running.[1] For example, we can charge black people more (based on zip-code demographics) to discourage them from flying first class. We could, if we wanted to, require PII prior to bidding on tickets. Imagine if the NYSE priced publicly traded equities in this manner? The irony of cutting out the middle man to reduce costs, is that at some stage, we may be paying an intermediary (broker/marketmaker) to anonymize our order flow to get "fair" prices. [1] This is what it really is, lets be honest.

harryh 13y ago
How is there front running when there are only two parties in the transaction?
- ChrisBland 13y ago
  Not front running the traditional sense, what I believe they are referring to is when you search for a flight, then come back and search it again and its gone up by $80 since they know you are interested in that destination but didnt book it last time.
  - raganwald 13y ago
    This technique goes back long before the Internet. I recall working in a computer store where it was a standard practice to give someone a quote with an expiry date, and if they missed the time limit extra money would be tacked on with some made-up BS excuse (We sold out of Foobars and the new shipment came in at a higher price). It was the exact same reasoning: The customer walked away, shopped around, and came back because we have everyone else beat. So now we need to raise our price as much as possible without making it worth their while to go back to someone else. And in fact, they probably are in our place because someone else raised their price on them, or disclosed hidden gotchas, so we have leverage.
    - JulianMorrison 13y ago
      Pull that trick on me and I'd go a mile out of my way not to give you business any more. And I wouldn't be alone. Punishment of cheaters and exploiters is a human social instinct.
      - dllthomas 13y ago
        Is there cheating going on here?
        raganwald 13y ago
        There is if you lie to the customer. There isn't if you say "Tough bananas, the written quote expired, we both get to renegotiate."
        dllthomas 13y ago
        Fair enough.
      - raganwald 13y ago
        Your outrage is noted. I feel exactly the same way about the way highly admired companies around here behave, only they have nicer names for exploitation like "price discrimination" and "market segmentation" and "monetizing customers."
        fennecfoxen 13y ago
        The universities have that one won hands-down: they call it "financial aid."
        PhasmaFelis 13y ago
        So it's okay to lie to your customers and be an asshole as long as other people are doing it too.
        13y ago
- 001sky 13y ago
  A market maker can front-run you with 3rd party inventory (just like Kayak).
  - harryh 13y ago
    Huh. I didn't know Kayak dealt with 3rd party inventory. Interesting.
Rizz 13y ago
>Imagine if the NYSE priced publicly traded equities in this manner? Actually, stock exchanges like NYSE are accused of front-running, the SEC has been investigating for a few years already. http://online.wsj.com/news/articles/SB10000872396390443989204577599243693561670 http://online.wsj.com/news/articles/SB1000087239639044398920... Or if you prefer a 50 minute documentary: http://www.youtube.com/watch?v=kFQJNeQDDHA http://www.youtube.com/watch?v=kFQJNeQDDHA
damian2000 13y ago
Airlines are masters of dynamic pricing via algorithms which they constantly tune. I've written some AirAsia scraping code in Java + Selenium web driver that runs every hour on a VPS - I use it just to discover the best time to buy holiday flights. Have noticed that prices for a particular route often change several times a day.
cbr 13y ago
For example, we can charge black people more (based on zip-code demographics) to discourage them from flying first class. A middleman like Kayak has no incentive to keep black people out of first-class. They do have an incentive to price discriminate: charge people more who would be willing to pay more. Likely outcome: lower fares for economically disadvantaged groups. Except the middlemen are all required to charge the fare the airline sets, and can't compete on price. The airlines currently price discriminate primarily by separating the relatively price-insensitive business travelers from highly price-sensitive leisure travelers. This is why you'll generally see lower fares for round trips that span a weekend: if you're traveling for work you generally don't want to spend your weekend off away from your family.
- 001sky 13y ago
  No incentive to keep black people out of first-class. They do have an incentive to price discriminate: charge people more who would be willing to pay more. Likely outcome: lower fares for economically disadvantaged groups. This is insanely naive. Do you really think that rich people don't pay a premium for "exclusivity"? And who, pray tell, do you imagine they are trying to exclude? [0] http://www.wired.com/design/2013/08/how-segregated-is-your-city-this-eye-opening-map-shows-you/ http://www.wired.com/design/2013/08/how-segregated-is-your-c... [1] http://jezebel.com/5985110/new-york-fashion-weeks-models-are-getting-whiter http://jezebel.com/5985110/new-york-fashion-weeks-models-are... [2] http://www.nydailynews.com/new-york/macy-hit-class-action-shopping-black-suit-article-1.1515744 http://www.nydailynews.com/new-york/macy-hit-class-action-sh... [3] http://valleywag.gawker.com/harvard-study-black-people-get-screwed-on-airbnb-1505185859 http://valleywag.gawker.com/harvard-study-black-people-get-s... [4] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1934432 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1934432 [5] http://valleywag.gawker.com/racial-profiling-newest-trend-in-silicon-valley-1058533301 http://valleywag.gawker.com/racial-profiling-newest-trend-in... [6] http://qz.com/149342/the-uncomfortable-racial-preferences-revealed-by-online-dating/ http://qz.com/149342/the-uncomfortable-racial-preferences-re... [7] see p. 4, http://ccrjustice.org/files/Report-CCR-NYPD-Stop-and-Frisk.pdf http://ccrjustice.org/files/Report-CCR-NYPD-Stop-and-Frisk.p...
  - 13y ago

by 001sky 13y ago

harryh 13y ago

How is there front running when there are only two parties in the transaction?

ChrisBland 13y ago
Not front running the traditional sense, what I believe they are referring to is when you search for a flight, then come back and search it again and its gone up by $80 since they know you are interested in that destination but didnt book it last time.
- raganwald 13y ago
  This technique goes back long before the Internet. I recall working in a computer store where it was a standard practice to give someone a quote with an expiry date, and if they missed the time limit extra money would be tacked on with some made-up BS excuse (We sold out of Foobars and the new shipment came in at a higher price). It was the exact same reasoning: The customer walked away, shopped around, and came back because we have everyone else beat. So now we need to raise our price as much as possible without making it worth their while to go back to someone else. And in fact, they probably are in our place because someone else raised their price on them, or disclosed hidden gotchas, so we have leverage.
  - JulianMorrison 13y ago
    Pull that trick on me and I'd go a mile out of my way not to give you business any more. And I wouldn't be alone. Punishment of cheaters and exploiters is a human social instinct.
    - dllthomas 13y ago
      Is there cheating going on here?
      - raganwald 13y ago
        There is if you lie to the customer. There isn't if you say "Tough bananas, the written quote expired, we both get to renegotiate."
        dllthomas 13y ago
        Fair enough.
    - raganwald 13y ago
      Your outrage is noted. I feel exactly the same way about the way highly admired companies around here behave, only they have nicer names for exploitation like "price discrimination" and "market segmentation" and "monetizing customers."
      - fennecfoxen 13y ago
        The universities have that one won hands-down: they call it "financial aid."
      - PhasmaFelis 13y ago
        So it's okay to lie to your customers and be an asshole as long as other people are doing it too.
        13y ago
001sky 13y ago
A market maker can front-run you with 3rd party inventory (just like Kayak).
- harryh 13y ago
  Huh. I didn't know Kayak dealt with 3rd party inventory. Interesting.

Rizz 13y ago

>Imagine if the NYSE priced publicly traded equities in this manner? Actually, stock exchanges like NYSE are accused of front-running, the SEC has been investigating for a few years already. http://online.wsj.com/news/articles/SB10000872396390443989204577599243693561670 http://online.wsj.com/news/articles/SB1000087239639044398920... Or if you prefer a 50 minute documentary: http://www.youtube.com/watch?v=kFQJNeQDDHA http://www.youtube.com/watch?v=kFQJNeQDDHA

damian2000 13y ago

Airlines are masters of dynamic pricing via algorithms which they constantly tune. I've written some AirAsia scraping code in Java + Selenium web driver that runs every hour on a VPS - I use it just to discover the best time to buy holiday flights. Have noticed that prices for a particular route often change several times a day.

cbr 13y ago

For example, we can charge black people more (based on zip-code demographics) to discourage them from flying first class. A middleman like Kayak has no incentive to keep black people out of first-class. They do have an incentive to price discriminate: charge people more who would be willing to pay more. Likely outcome: lower fares for economically disadvantaged groups. Except the middlemen are all required to charge the fare the airline sets, and can't compete on price. The airlines currently price discriminate primarily by separating the relatively price-insensitive business travelers from highly price-sensitive leisure travelers. This is why you'll generally see lower fares for round trips that span a weekend: if you're traveling for work you generally don't want to spend your weekend off away from your family.

001sky 13y ago
No incentive to keep black people out of first-class. They do have an incentive to price discriminate: charge people more who would be willing to pay more. Likely outcome: lower fares for economically disadvantaged groups. This is insanely naive. Do you really think that rich people don't pay a premium for "exclusivity"? And who, pray tell, do you imagine they are trying to exclude? [0] http://www.wired.com/design/2013/08/how-segregated-is-your-city-this-eye-opening-map-shows-you/ http://www.wired.com/design/2013/08/how-segregated-is-your-c... [1] http://jezebel.com/5985110/new-york-fashion-weeks-models-are-getting-whiter http://jezebel.com/5985110/new-york-fashion-weeks-models-are... [2] http://www.nydailynews.com/new-york/macy-hit-class-action-shopping-black-suit-article-1.1515744 http://www.nydailynews.com/new-york/macy-hit-class-action-sh... [3] http://valleywag.gawker.com/harvard-study-black-people-get-screwed-on-airbnb-1505185859 http://valleywag.gawker.com/harvard-study-black-people-get-s... [4] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1934432 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1934432 [5] http://valleywag.gawker.com/racial-profiling-newest-trend-in-silicon-valley-1058533301 http://valleywag.gawker.com/racial-profiling-newest-trend-in... [6] http://qz.com/149342/the-uncomfortable-racial-preferences-revealed-by-online-dating/ http://qz.com/149342/the-uncomfortable-racial-preferences-re... [7] see p. 4, http://ccrjustice.org/files/Report-CCR-NYPD-Stop-and-Frisk.pdf http://ccrjustice.org/files/Report-CCR-NYPD-Stop-and-Frisk.p...
- 13y ago