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Algorithmic pricing

Michael Eisen found a good example of algorithmic pricing on Amazon which resulted in two booksellers pricing a book on fly genetics at almost $24 million (via yewknee).

On the day we discovered the million dollar prices, the copy offered by bordeebook was 1.270589 times the price of the copy offered by profnath. And now the bordeebook copy was 1.270589 times profnath again. So clearly at least one of the sellers was setting their price algorithmically in response to changes in the other’s price. I continued to watch carefully and the full pattern emerged.

Once a day profnath set their price to be 0.9983 times bordeebook’s price. The prices would remain close for several hours, until bordeebook “noticed” profnath’s change and elevated their price to 1.270589 times profnath’s higher price. The pattern continued perfectly for the next week.

I’m waiting for the algorithmic pricing that messes up in the other direction and nets me a Gutenberg bible for pocket change.