"Retailers are using artificial-intelligence software to set optimal prices, testing textbook theories of competition, says a WSJ report.
An anonymous reader shares the article:
One recent afternoon at a Shell-branded station on the outskirts of this Dutch city, the price of a gallon of unleaded gas started ticking higher, rising more than three-and-a-half cents by closing time.
A little later, a competing station three miles down the road raised its price about the same amount. The two stations are among thousands of companies that use artificial-intelligence software to set prices In doing so, they are testing a fundamental precept of the market economy. [...]
Advances in AI are allowing retail and wholesale firms to move beyond 'dynamic pricing' software, which has for years helped set prices for fast-moving goods, like airline tickets or flat-screen televisions.
Older pricing software often used simple rules, such as always keeping prices lower than a competitor.
These new systems crunch mountains of historical and real-time data to predict how customers and competitors will react to any price change under different scenarios, giving them an almost superhuman insight into market dynamics.
Programmed to meet a certain goal -- such as boosting sales -- the algorithms constantly update tactics after learning from experience.
Even as the rise of algorithms determining prices poses a challenge to anti-trust law, authorities in the United States and Europe haven't opened probes or accused anyone of impropriety for using AI to set prices."
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