Tuesday, April 26, 2011

Textbook Costs Gone Wild

Sometimes, you just can’t make this stuff up...

College students always complain about the cost of textbooks, but imagine the howls if they had to shell out the eight-figure price for a single title that Michael Eisen wrote about in a recent blog post. The evolutionary biologist from the University of California, Berkleley, was searching Amazon.com for The Making of a Fly by Peter Lawrence when he found 17 used editions priced for less than $36 apeice—and two, unused copies of the out-of-print book listed at just over $1.7 million, and nearly $2.2 million, respecctively (not including shipping).

Thinking it had to be a computer glitch, he reloaded the page. When he did, the price had increased to nearly $2.8 million. He kept tabs on the title and saw it ended the day priced at more than $3.5 million.

Theorizing he was watching pricing algorithms gone wild, Eisen monitored the prices for more than a week, with the cheaper edition reaching $5.6 million and the more expensive title upward of $7.2 million. “Clearly at least one of the sellers was setting their price algorithmically in response to changes in the other’s price,” he observed.

Eisen concluded that pricing algorithms provide endless possibilities for mischief if no one is paying attention. In the case of The Making of a Fly, amazon.com finally did catch the error and dropped the price to $106.23 and $134.97 respectively, spoiling all the fun.

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