cross-posted from: https://scribe.disroot.org/post/6760167
Everything costs more because the algorithm says so: Tariffs and inflation dominate headlines, but personalized pricing is the real affordability crisis
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Our day-to-day navigation of prices rests on a comforting illusion—that we all encounter the same marketplace. In reality, this is happening less often. Firms have always had the right to set prices, but that process has become continuous and individualized: a ceaseless micro-calculation of how much you personally might be willing to pay for something. In a way, we’re all participating in an ongoing pricing experiment. And, like the best subjects, we barely realize it.
This new marketplace emerged, in part, because the tools to reshape it became cheaper, faster, and ubiquitous. For firms, price personalization—or discrimination—no longer requires building a proprietary system; it can be purchased off the shelf.
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Here’s how it works. Companies gather data from many routine digital touchpoints: web and app tracking (cookies, pixels, and device fingerprinting), geolocation from phones and browsers, and in-store sensors. Also involved are data brokers who sell detailed consumer profiles combining demographics, purchase histories, and online behaviour. After the initial lure with attractive benefits and promises of discounts, (“the hook”), you’re handed over to a surveillance infrastructure that mines data about your behaviour and willingness to pay (“the hack”) and then raises fees, cuts rewards, and traps you in the program by making cancellation difficult (“the hike”).
In theory, algorithms can offer discounts to price-sensitive shoppers too. But this isn’t necessarily what happens. AI-fuelled price setting can quietly steer those with the least power to shop around to higher prices and poorer quality goods, thereby deepening the burden on low-income households. When apps can infer when it’s your payday, what neighbourhood you live in, and aggregate your past purchasing habits, they can raise prices to your presumed desperation. For hard-up households or lone parents, that means a personalized penalty on being broke or time starved.
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For generations, we built guardrails around how sellers could charge buyers. But those rules were written for human decision makers not self-learning software. They were meant for a world of price tags and weekly flyers not millisecond-fast adjustments and invisible markups. Pricing systems, not tariffs or inflation, are fast becoming the real cost of living.
Completely disconnected from the cost of production, prices based on how much can be extracted from the buyer will only create black market opportunities for low price exploits. Hack the system, get stuff for super cheap, resell it. They want it all automated so nobody will be checking anything, even if they do, just payoff that person and it's easy money.
Yeah, I already never buy legal weed.
It's one of the biggest scams on the planet just to take advantage of people who don't know any better.
Then you get investigated for patents, or product safety or other bullshit. The system is rigged if you hack it or not. :/
Prices are disconnected from the cost of production. The price is determined at the marketplace by the customer's willingness to pay (according to Behavioral Economics, which is mostly applied in modern economics, as opposed to the reservation price in traditional economics).
This is also one mistake some start-up founders make when introducing their product: calculating the costs and add a certain percentage, but this is not advisable (because, among others, this cost-up pricing could result in a price for your new product that customers are not willing to pay ...).
That would not work, if, say, you go to McDonald's and buy through the app, as the McMuffin isn't sold in advance ... And even in some markets where a resale could theoretically be made (such as for concert tickets or flight tickets), it is often legally prohibited to resell a tickets above face value (that's the case for concert tickets in the UK since the start of this year, for example) or the product is connected to your ID ( that's the case with many airlines do with flight tickets).
Behavioral economics is just a more refined system of economic exploitation. It makes every interaction with the economy a battle to make you pay a much as possible for no reason other than being selfish, using modern data analysis for leverage.
People illegally buy and sell shit all the time. That's what the black market is. If you don't think people with figure out how the automated systems works and exploit it, you're simply wrong. There are always ways to exploit a system.
He's not disagreeing that the system is not exploitable, he's saying exploitation has been made illegal.