Thanks to online marketplaces, consumers are no longer limited to a few brick-and-morter stores to buy their holiday gifts. Now, they can order practically any item from any corner of the Earth. Surely this increased competition means better prices? Ariel Ezrachi and Maurice E. Stucke warn that this might not be so. In their provocative new book, Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy, they argue that big data, game theory, and behavioural psychology has created new opportunities to fix prices and rip you off (without you knowing it). They foresee a future where algorithms dramatically inflate prices, even without being intentionally programmed to do so. Stucke and Ezrachi, two legal scholars, say that under existing legislation, algorithmically-driven price fixing would not even be illegal.
Listen to the December 22, 2016 Cited podcast here.