In his article “When Computers Collide”, Greg Rosalsky identifies a new pricing strategy using complex algorithms. These algorithms utilize “reinforcement learning” to decide on the best prices for products. However, these algorithms do not follow the laws of supply and demand, rather they raise prices by a type of “collusion”. Interestingly, the algorithms had no contact with each other, which emphasizes the “superhuman” abilities that such complex programs have. While some economists believe algorithmic pricing is beneficial for the markets, others have obvious concerns, such as how these algorithms go against anti-trust laws.

              Greg Rosalsky falls into the category of people who believe pricing by algorithm could actually benefit our economy. Two main arguments are presented: flexible pricing reduces waste and allows for more trades to occur. I believe the argument concerning waste is much stronger than the latter. For example, when produce begins to go bad or a product is in the decline stage, algorithmic pricing can determine that the prices of these products must be lower than normal. On the other hand, Rosalsky also argues that flexible pricing allows for more products to be made and more trades to occur. However, he provides very little support for his argument. Logically, I also do not see how his argument makes sense. From an economic standpoint, I would argue that higher prices actually cause less trade to occur.

              While arguments in support of algorithmic pricing do exist, I fall into the category of people that are more skeptical of its impact on the economy. Anti-trust laws dictate that companies can not collude by collectively raising prices. However, this seems to be exactly what algorithmic pricing does. The major issue with calling out this seemingly illegal activity, though, is that the algorithms are not communicating with one another. This emphasizes the extent at which algorithms operate beyond human understanding. Nevertheless, algorithmic pricing goes against the laws of supply and demand and unfairly raises prices for the consumer. There is little information given to public on how or why these prices are chosen, and because there is a sense of collusion occurring, consumers have very little power in these markets.

              As with many artificial intelligence advancements, there is no slowing down their progress and impact on society. It would be counterproductive to simply say let’s end the use of algorithmic pricing because I think the technology is too integrated into our markets to abandon. We can, however, work on ways to manage this technology. I originally had two solutions: keep consumers fully informed on how prices are chosen or revise anti-trust laws. As I have learned more about artificial intelligence, however, I now believe there is no way to fully keep consumers informed about algorithmic pricing. This technology goes beyond experts understanding and, therefore, could never truly be understood by your average consumer. On the other hand, revisions to anti-trust laws could make for a fairer market that strictly defines “collusion” by artificial intelligence.
 SOURCE: 
https://www.npr.org/sections/money/2019/04/02/708876202/when-computers-collude