Real world Quote by Brian Christian
““To see what happens in the real world when an information cascade takes over, and the bidders have almost nothing but one another’s behavior to estimate an item’s value, look no further than Peter A. Lawrence’s developmental biology text The Making of a Fly, which in April 2011 was selling for $23,698,655.93 (plus $3.99 shipping) on Amazon’s third-party marketplace. How and why had this—admittedly respected—book reached a sale price of more than $23 million? It turns out that two of the sellers were setting their prices algorithmically as constant fractions of each other: one was always setting it to 0.99830 times the competitor’s price, while the competitor was automatically setting their own price to 1.27059 times the other’s. Neither seller apparently thought to set any limit on the resulting numbers, and eventually the process spiraled totally out of control.””
About This Quote
Source Book: The Alignment Problem, 2020
Algorithmic pricing can create feedback loops that drive prices to absurd levels.
In simple terms: Algorithms can amplify each other's actions.
Key Takeaway
Monitor and set limits on automated systems.
Themes
technology
economics
feedback loops
Mood
cautious
analytical
Type
technical
critical
When to use this quote
- online marketplaces
- stock trading
- auction platforms
Key Concepts
Algorithmic pricing
information cascades
Questions to Reflect On
- How can we design safeguards against runaway algorithms?
- What role should regulation play?
A Different Perspective
Human oversight may be insufficient.
![“[In science any model depends on a pre-chosen taxonomy] a set of classifications into which we divide the enormous complexity of the real world... Land, labor, and capital are extremely heterogeneous aggregates, not much better than earth, air, fire, and water.” quote by Kenneth E. Boulding](https://sms4smile.com/quotes/img-quotes/47e/kenneth-e-boulding-3728_air_in-science-any-model-depends-on-a-pre-ch_12383.jpg)
