Positive Feedback Pricing

Hat tip to John Sterman & Travis Franck for passing along this cool example of positive feedback, discovered on Amazon by evolutionary biologist Michael Eisen. Two sellers apparently used algorithmic pricing that led to exponential growth of the price of a book:

bookPriceThis reminds me of a phenomenon that’s puzzled me for some time: “new economy” firms have at least as many opportunities for systemic problems as any others, yet modeling remains somewhat “old economy” focused on physical products and supply chains and more traditional services like health care. Perhaps this is just my own observational sampling bias; I’d be curious to know whether others see things the same way.

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