What happens when two algorithms get into a deathmatch over book pricing? You get a book about fly developmental biology that will run you more than $23 million plus shipping of course.
Michael Eisen, an evolutionary biologist at UC Berkeley, stumbled onto some algorithmic pricing craziness. And all the guy was looking for was an extra copy of Peter Lawrence's The Making of a Fly for the lab. The book is out of print, but Amazon has 17 copies for sale and two new that'll run you a lot of dough.
Eisen writes on his blog:
At first I thought it was a joke – a graduate student with too much time on their hands. But there were TWO new copies for sale, each be offered for well over a million dollars. And the two sellers seemed not only legit, but fairly big time (over 8,000 and 125,000 ratings in the last year respectively). The prices looked random – suggesting they were set by a computer. But how did they get so out of whack?
Amazingly, when I reloaded the page the next day, both priced had gone UP! Each was now nearly $2.8 million. And whereas previously the prices were $400,000 apart, they were now within $5,000 of each other. Now I was intrigued, and I started to follow the page incessantly. By the end of the day the higher priced copy had gone up again. This time to $3,536,675.57. And now a pattern was emerging.
The pattern turned out to be a pissing match between two algorithms setting prices. Eisen noted the patterns as the algorithms of two sellers---Bordeebook and Profnath---faced off. Eisen wrote:
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.
Fast forward a bit and Amazon retailers---much like the e-commerce giant---use algorithms to price goods. Every once in a while, the algorithms fail to do a sanity check. And that's how you get biology books that'll run you millions of dollars. In an industry that increasingly depends on smart algorithms it's a bit scary how dumb things can get.
At least Lawrence's reviews were good. Tip of the hat to Amazon reviewer John Taylor Kesler.
I was fortunate enough to buy this at the bargain price of $19,087,354 there must have been a sale because the next day it was listed at $23M. I was very pleased to find upon arrival that the book contained very useful information, however to be honest I was expecting a few more pictures for the price paid. I highly recommend this to all my associates, I have many acquaintances with children in only the best private schools who will be buying several copies. If the price has you worried, ask yourself the American question: "can you really put a price on good education?"