Want to See How Crazy a Bot-Run Market Can Be?

By James Fallows

Then check out, if you haven't seen it already, the description by Michael Eisen, a biologist at UC Berkeley, of his efforts to buy an old science book, about flies, from Amazon. Automatic pricing algorithms by used-book vendors there drove the asking price for The Making of a Fly to more than $23.6 million. Here, from Eisen, was the bidding early in the process, when the book was going for just over $2 million, plus $3.99 shipping:

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I've written before, though I can't find the link at the moment, about the oddities of used-book pricing on Amazon, where some books that originally went for $10 are listed at 10 cents and others, inexplicably, at $500. Eisen explains the automatic-bidding "logic" that produced the $23 million price. As he puts it, in a model of applying scientific deduction to a clearly wacky phenomenon, "Both profnath [one seller] and bordeebook [the other] were clearly using automatic pricing - employing algorithms that didn't have a built-in sanity check on the prices they produced." (Thanks to MTJ for the tip.)

For more on the general concept of out-of-control bots upsetting financial and social life, see Bill Davidow's recent book, with Katie Hafner, Overconnected. It's $18.45 on Amazon -- or a bargain at only $22 million direct from me.

This article available online at:

http://www.theatlantic.com/technology/archive/2011/04/want-to-see-how-crazy-a-bot-run-market-can-be/237773/