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Ben Tolkin 4/28/2016
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Private. Collaborators only.
When we’ve reinvented bookkeeping and accounting, we’re also going to end up reinventing price-setting and the concept of exchange on the consumer side as well. We’re used to thinking of “price” as a property of an object, like size or color, because that’s an easy heuristic for our human-sized meat brains, but a big data algorithm could understand perfectly that it’s really a property of the buyers and sellers. One worry is that this leads to asymmetric exchanges: individual human consumers can be manipulated by sellers with vastly more computing power.
Airbnb and Uber have already gotten flak for algorithmic price setting that can be counterintuitive and predatory. In the long run, one would hope that consumers also organize, sharing data more freely among each other and opening up the analysis of that data, so that they can negotiate with sellers on an equal cognitive footing. On the other hand, a dynamic, algorithmic price-setting model could also be more liable to hacks; I think there are some precursors to this in Amazon and eBay price-setting bots. (http://www.telegraph.co.uk/technology/amazon/9385986/Robo-pricing-risks-Amazon-price-crash.html) Double-entry bookkeeping’s simplicity leads to problems, but it also prevents the system from being screwed around with too much.
I think the shift towards a dynamic, algorithm-aided concept of value is inevitable; the question is whether this will come as a broad cultural shift, sweeping over buyers and sellers equally, or whether a relatively small number of people in possession of the best data, machines, and algorithms will reap most of the benefits. We should strive to publicly redefine value, and create tools for all of us to process the data that produces value, or we’ll find the same organizations that used our data for targeted advertising able to make even more manipulative targeted prices.