While searching the site for a copy of Peter Lawrence's book The Making of a Fly (1992), long out of print, the postdoc happened across two merchants selling secondhand editions for -- get this -- $1.7 million and $2.2 million respectively! A series of price escalations ensued as Eisen returned to the product page over following days and weeks until one seller's copy topped out at $23 million.
But that's not the worst of it. One of the comments Eisen received on his blog post pointed to a different secondhand book selling on Amazon for $900 million. It wasn't an original edition of the Gutenberg Bible from 1463, nor was it a one-of-a-kind art book, either. What screed was worth almost $1 billion? Why, a paperback copy of actress Lana Turner's autobiography, published in 1991, of course! (I suspect the price may change, so in the event that it does, here's a screen shot showing the price on Saturday, April 30th.)
Good scientist that he is, Eisen hypothesized that something wasn't right about the prices on the fly book. After all, they seemed to be adjusting themselves upward each time he returned to the site, and like two countries engaged in an arms race, they always seemed to do so in relationship to each other. Eisen crunched some numbers:
On the day we discovered the million dollar prices, the copy offered by bordeebook [one of the sellers] was1.270589 times the price of the copy offered by profnath [the other seller]. 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. (emphasis added)
So the culprit behind the extraordinarily high prices wasn't a couple of greedy (or totally out of touch) booksellers. It was, instead, the automated systems -- the computer algorithms -- working behind the scenes in response to perceived market dynamics.
I've spent the last couple of blog posts talking about algorithmic culture, and I believe what we're seeing here -- algorithmic pricing -- may well be an extension of it.
It's a bizarre development. It's bizarre not because computers are involved in setting prices (though in this case they could have been doing a better job of it, clearly). It is bizarre because of the way in which algorithms are being used to disrupt and ultimately manipulate -- albeit not always successfully -- the informatics of markets.
Indeed, I'm becoming convinced that algorithms (at least as I've been talking about them) are a response to the decentralized forms of social interaction that grew up out of, and against, the centralized forms of culture, politics, and economics that were prevalent in the second and third quarters of 2oth century. Interestingly, the thinkers who conjured up the idea of decentralized societies often turned to markets -- and more specifically, to the price system -- in an attempt to understand how individuals distributed far and wide could effectively coordinate their affairs absent governmental and other types of intervention.
That makes me wonder: are the algorithms being used on Amazon and elsewhere an emergent form of "government," broadly understood? And if so, what does a billion dollar book say about the prospects for good government in an algorithmic age?