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teeray 6 days ago [-]
It would be abhorrent to let humans change the prices of goods and services based on the color of your skin, age, gender, religion, etc. However, if a computer does it, that’s apparently just fine.
GuB-42 6 days ago [-]
For age it is common and explicit. Senior discounts for instance, and a bit less explicitly, student discounts. It feels better when it is framed as a discount, but it is equivalent to overcharging those who don't get the discount.
For the other categories, it is usually not explicit, but it definitely happens, especially when haggling is involved.
coldtea 6 days ago [-]
Not the same, in fact the exact opposite.
Student and senior discounts are meant as support/benefits/encouragment, to the poorer and weaker.
The commercial version is about the inverse: skinning every group as much as possible.
killingtime74 5 days ago [-]
Anyone can be a student though. Senior discount is definitely legal positive discrimination.
Price discrimination has been studied and practiced in various firms for decades. Information assymmetry is endemic to virtually any market relation other than haggling over marbles. People feel their economic weakness as unfair. What's really new here, warranting regulation?
The problem is that the value of these information markets creates all the wrong incentives. Companies layer surveillance into everything to subsidize other businesses, and people expect free search and email, and cheap home security even at others' tiny cost.
It's too bad these services live forever as cash cows to subsidize crazy ideas and schemes. They should graduate to public utilities once the product stabilizes.
bit1993 6 days ago [-]
> It's too bad these services live forever as cash cows to subsidize crazy ideas and schemes. They should graduate to public utilities once the product stabilizes.
In essence if you take capitalism to it's max you will eventually meet Marx.
2009mobile 6 days ago [-]
The article describes Uber's surge pricing as a form of surveillance pricing, but this is misleading. The primary purpose of surge pricing isn't to maximize profit, it's to increase supply. Dynamic pricing in a 2-sided network is different than in retailing.
salawat 6 days ago [-]
>The primary purpose of surge pricing isn't to maximize profit, it's to increase supply.
Your thinking is overly rigid here. An action can be multiple things at the same time. Uber's incentive is to maximize transactions per unit time window. You are correct in that surge pricing on a first level pass isn't about profit maximization. You have to go up a layer of a straction or two before that becomes the case. Uber has to increase supply to fulfill transactions for a signalled demand, signalled demand is high, thus signaling more profit to be made, therefore the surge while at first seeming like a negative signal to consumers, is still acting systemically as a mechanism to bring about profit maximization.
Hiding this type of thing from the end consumer, or not saying it out loud, is a favorite of the current batch of business people.
dghlsakjg 6 days ago [-]
It isn’t just to increase supply, it also reduces demand. It’s a mechanism for finding a new market clearing price… that necessarily maximizes profit
esseph 6 days ago [-]
> The primary purpose of surge pricing isn't to maximize profit, it's to increase supply.
Hm. This doesn't pass the sniff test for me.
If say 500 people take an Uber to a venue or need an Uber from the airport, increasing the price more often than not is just going to increase revenue. The price increase doesn't force you into an alternative choice if there are no alternatives.
Many places don't have substantial taxi or similar services, and public transit doesn't meet that same need with people in suburbs / ex-urbs / rural.
nh23423fefe 6 days ago [-]
the price increase can incentivize more drivers thus increasing supply. conversely driving the price to zero would certain increase demand and eliminate supply.
i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
esseph 6 days ago [-]
> the price increase can incentivize more drivers thus increasing supply
But never high enough to meaningfully dilute or really in any way change demand, and by raising the number of drivers, the parent company ultimately still makes more profit.
This seems self reinforcing.
> i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
I'm not pretending anything, I'm considering the reality on the ground when I travel across the US.
nh23423fefe 5 days ago [-]
> But never high enough to meaningfully dilute or really in any way change demand
literally you restating inelastic demand assumption
> I'm considering the reality on the ground
oh, reality is on your side. whoops i didn't realize i was arguing with reality. so you are definitionally correct?
victorbjorklund 6 days ago [-]
Also it decrease demand. Someone who is feeling ”eh maybe I’ll take an uber or the train” will be more likely to take the train.
esseph 6 days ago [-]
Not an option in much of the US. I'd argue it's mostly a Bay Area and DC corridor thing.
victorbjorklund 3 days ago [-]
Yea, but Uber is not only in US. US is a minority of the world.
cuttothechase 6 days ago [-]
Well the same logic can be used to justify bias too. I am surge pricing a person of religion X or race Y because I am increasing the supply for All races / religion in a equitable way!
cowpig 6 days ago [-]
Can you explain why they are mutually exclusive?
BrenBarn 6 days ago [-]
As usual, "empowering" the FTC to issue fines, or even allowing private suits, is ineffective on its own. The fines need to be required, their levels set by law in a manner proportional to the size of the companies involved, and it needs to be made clear that there is no statute of limitations and that all growth built on ill-gotten gains from past surveillance will (not can) be rolled back when the hammer finally drops. That means, e.g., if you start using surveillance pricing in 2016 and you get caught for it in 2026, everything your company (and its executives and board members) gained in the interim will be rolled back. Current conceptions of punishment for these types of things are simply way too low. The entire tree that has grown from these kinds of activities must be pulled out from the root to adequately deter potential malefactors.
wg0 6 days ago [-]
Few years ago, recruiter at a very well known retailer was on phone with me for a Python backend role. I asked him how many people were on my team that I'm going to join.
He told me some 80 developers. Bit surprised and thinking probably recruiter is too noob and quoting me the size of the development team, I asked him again that no, I'm interested in knowing my team size.
He instead corrected me saying that he's not talking about whole engineering team, he's talking about the pricing team that is a sub team inside the data science team and I'll be joining the pricing team that alone has 80 developers.
shimman 6 days ago [-]
Modern corporations aren't profitable because of sound business decisions, they're profitable because of corporate welfare + federal subsidies. Not shocked to hear such numbers.
I worked at an insurance company that had very similar numbers. Went as well as you suspect.
fuzzfactor 5 days ago [-]
>Modern corporations aren't profitable because of sound business decisions
One of the things to think about is the way that lots of average businessmen have always been able to rake in the bucks without resorting to any type of predatory approaches coming anything close to this.
Probably more so in less-modern times, like before MBA's had yet made significant impact. And some of these were much rougher times economically.
The contrast can be so dramatic that there's a major logical conclusion about operators who run their businesses this way now.
They're just plain below-average businessmen.
bigiain 6 days ago [-]
"In 2012, Orbitz infamously displayed more expensive hotel offers to Mac users on the assumption that they were less price-sensitive."
I was doing that in the late 90s. Not marking up prices, but displaying higher priced hotels at the top of search returns. It was surprisingly effective when we compared aggregated per night rates between Mac and Windows users (as identified by user-agent).
nickburns 6 days ago [-]
So you're an admitted scumbag? (Primarily Windows user by the way.)
PradeetPatel 5 days ago [-]
No need for this kind of attitude here. If you can extract more value out of a customer using more data points, wouldn't you? Or will you simply leave money on the table for someone else to take.
OgsyedIE 5 days ago [-]
I agree, if you can take advantage of a situation in some way, it's your duty as an American to do it. Why should the race always be to the swift, or the jumble to the quick-witted? Should they be allowed to win merely because of the gifts God gave them? Well I say, cheating is the gift man gives himself.
nickburns 5 days ago [-]
Guy's clearly not an American! (Either of them.)
bigiain 5 days ago [-]
With the benefit of hindsight. Yeah. Probably...
neeeeeeal 6 days ago [-]
Based on the title, I assumed this would be about how the consumer could grasp and then counter-utilize the pricing differences these algorithms produce.
For example, understanding that you are being “targeted” by these algorithm for premium extraction and taking measures such as spinning up VPNs, clearing cache/history, etc to save the consumer from overpaying.
Seems like a good market for such a product would exist…
Some day i might find the time and energy to expand keepassxc to manage fictitious identities and tie them to accounts.
morkalork 6 days ago [-]
Calling it the "bend you over a barrel" or "fuck you, what's it worth to you?" pricing schemes probably wasn't allowed.
It is a tone shift tho, the new leader of the NDP in Canada is using the term now.
secretsatan 6 days ago [-]
I’m not sure that’ll help at the supermarket
NDlurker 6 days ago [-]
This is really making me consider going back to all cash and local purchases. Maybe prepaid debit cards and a PO box for when I need to order something online.
2ndorderthought 6 days ago [-]
It's more important now than ever to spend an extra 2 dollars shopping locally. Your neighbors will appreciate it. Bezos will build another rocket and cut more jobs.
NDlurker 6 days ago [-]
Agreed. I shop locally when I can. It's frustrating though that some of that stuff can't be found locally anymore. I went to 3 businesses today looking for a couple cheap car parts. Couldn't find them so ended up getting one part off eBay and then having my friend order the other with his Amazon Prime account.
But yeah, I do spend as much money at local/regional businesses as I can. And I've started donating to local charities to help my neighbors.
pizzly 6 days ago [-]
Perhaps in some places but if you live in a country without much competition and very high cost of living its much more than an extra 2 dollars to shop locally. Prices are routinely 1.5 - 2x more if you buy locally than online here. Also if money is tight then even if its just an extra 2 dollars then you should make the purchasing decision that benefits you. That extra money is health (both physical and mental (R&R))
throwaway85825 6 days ago [-]
Most people don't have an extra 2 dollars.
pizzly 6 days ago [-]
You will find many companies don't allow prepaid debit cards. OpenAI months ago refused to accept prepaid debit card but allowed personal debit card. Not sure how they know its a prepaid card though (Visa prepaid). I think many companies are using credit cards as a form of ID.
bestouff 6 days ago [-]
This can't happen in EU. Thanks again.
wg0 6 days ago [-]
It is happening in EU.
inetknght 6 days ago [-]
"Can't"?
origin_ 6 days ago [-]
why so?
bit1993 6 days ago [-]
I don't buy this. Doesn't supply and demand fix this unless of course you are dealing with a monopoly and have no choice. Don't customers find the most affordable goods in the market place and aren't goods priced competitively? What am I missing?
nemomarx 6 days ago [-]
If all the airlines (or whatever business) are doing something like this, how would you know what the prices are and what the alternatives are? Custom prices per user based on willingness to pay shifts market value around a lot.
bit1993 6 days ago [-]
> If all the airlines (or whatever business) are doing something like this
Then that would be the main issue and far worse then the algorithms, that's a monopoly or cartel and not a free market. Because in a competitive market prices will be competitive with very little arbitrage.
blargey 5 days ago [-]
When the algorithm is for estimating consumer surplus, the line between coordination and independent cost-optimization disappears.
Why would you try to one-down on price if an “objective statistical AI algorithm” tells you you’d be leaving money on the table without gaining market share to compensate? All it takes is for the market to be sufficiently concentrated at that point.
greenmilk 6 days ago [-]
I've got news for you there. The Biden administration tried to take the first real antitrust action in decades and then suddenly a bunch of tech oligarchs switched from supporting Democrats to supporting a convicted felon
croemer 5 days ago [-]
Reality is rarely an ideal monopoly or perfect competition. In practice, there's always a bit of monopoly power.
throwaway85825 6 days ago [-]
The solution to such information asymmetry is to mandate disclosure of all algorithms and data used in setting the price.
Refreeze5224 6 days ago [-]
That won't work. The issue is a fundamental power imbalance being exploited by the seller. An individual will never have the time, money, or energy to be on an equal footing with companies that do this. So giving people a bunch of algorithms and data does nothing. It's just like giving people EULAs and pretending that because they have the stated terms, it somehow makes them an equal party. The solution is to ban situations where these power imbalances exist. Too bad capitalism is inherently based on them....
For the other categories, it is usually not explicit, but it definitely happens, especially when haggling is involved.
Student and senior discounts are meant as support/benefits/encouragment, to the poorer and weaker.
The commercial version is about the inverse: skinning every group as much as possible.
The problem is that the value of these information markets creates all the wrong incentives. Companies layer surveillance into everything to subsidize other businesses, and people expect free search and email, and cheap home security even at others' tiny cost.
It's too bad these services live forever as cash cows to subsidize crazy ideas and schemes. They should graduate to public utilities once the product stabilizes.
In essence if you take capitalism to it's max you will eventually meet Marx.
Your thinking is overly rigid here. An action can be multiple things at the same time. Uber's incentive is to maximize transactions per unit time window. You are correct in that surge pricing on a first level pass isn't about profit maximization. You have to go up a layer of a straction or two before that becomes the case. Uber has to increase supply to fulfill transactions for a signalled demand, signalled demand is high, thus signaling more profit to be made, therefore the surge while at first seeming like a negative signal to consumers, is still acting systemically as a mechanism to bring about profit maximization.
Hiding this type of thing from the end consumer, or not saying it out loud, is a favorite of the current batch of business people.
Hm. This doesn't pass the sniff test for me.
If say 500 people take an Uber to a venue or need an Uber from the airport, increasing the price more often than not is just going to increase revenue. The price increase doesn't force you into an alternative choice if there are no alternatives.
Many places don't have substantial taxi or similar services, and public transit doesn't meet that same need with people in suburbs / ex-urbs / rural.
i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
But never high enough to meaningfully dilute or really in any way change demand, and by raising the number of drivers, the parent company ultimately still makes more profit.
This seems self reinforcing.
> i mean, if you posit inelastic demand, you dont get you pretend you derived it as a conclusion right?
I'm not pretending anything, I'm considering the reality on the ground when I travel across the US.
literally you restating inelastic demand assumption
> I'm considering the reality on the ground
oh, reality is on your side. whoops i didn't realize i was arguing with reality. so you are definitionally correct?
He told me some 80 developers. Bit surprised and thinking probably recruiter is too noob and quoting me the size of the development team, I asked him again that no, I'm interested in knowing my team size.
He instead corrected me saying that he's not talking about whole engineering team, he's talking about the pricing team that is a sub team inside the data science team and I'll be joining the pricing team that alone has 80 developers.
I worked at an insurance company that had very similar numbers. Went as well as you suspect.
One of the things to think about is the way that lots of average businessmen have always been able to rake in the bucks without resorting to any type of predatory approaches coming anything close to this.
Probably more so in less-modern times, like before MBA's had yet made significant impact. And some of these were much rougher times economically.
The contrast can be so dramatic that there's a major logical conclusion about operators who run their businesses this way now.
They're just plain below-average businessmen.
I was doing that in the late 90s. Not marking up prices, but displaying higher priced hotels at the top of search returns. It was surprisingly effective when we compared aggregated per night rates between Mac and Windows users (as identified by user-agent).
For example, understanding that you are being “targeted” by these algorithm for premium extraction and taking measures such as spinning up VPNs, clearing cache/history, etc to save the consumer from overpaying.
Seems like a good market for such a product would exist…
Some day i might find the time and energy to expand keepassxc to manage fictitious identities and tie them to accounts.
It is a tone shift tho, the new leader of the NDP in Canada is using the term now.
But yeah, I do spend as much money at local/regional businesses as I can. And I've started donating to local charities to help my neighbors.
Then that would be the main issue and far worse then the algorithms, that's a monopoly or cartel and not a free market. Because in a competitive market prices will be competitive with very little arbitrage.
Why would you try to one-down on price if an “objective statistical AI algorithm” tells you you’d be leaving money on the table without gaining market share to compensate? All it takes is for the market to be sufficiently concentrated at that point.