Why Amazon Lists Books For Over $20 Million
If you’ve been buying used and rare books online for any period of time, I’m certain you’ve run into strange pricing anomalies. I’m not just talking about George R.R. Martin’s paperback collection Sandkings listed for $2,000 at Amazon, or Philip K. Dick’s Flow My Tears, the Policeman Said for $7,700 (although there’s plenty anomalous about those prices, as anyone with a copy will tell you.)
No, I’m talking about the instances where prices for books inexplicably spiral out of control, as UC Berkeley biologist Michael Eisen noted on his blog:
A few weeks ago a postdoc in my lab logged on to Amazon to buy the lab an extra copy of Peter Lawrence’s The Making of a Fly … Amazon listed 17 copies for sale: 15 used from $35.54, and 2 new from $1,730,045.91 (+$3.99 shipping)… the two sellers seemed not only legit, but fairly big time (over 8,000 and 125,000 ratings in the last year respectively). The prices looked random – suggesting they were set by a computer. But how did they get so out of whack?
Intrigued, Eisen began to track the prices.
I started to follow the page incessantly. By the end of the day the higher priced copy had gone up again. This time to $3,536,675.57. And now a pattern was emerging.
On the day we discovered the million dollar prices, the copy offered by bordeebook was 1.270589 times the price of the copy offered by profnath. And now the bordeebook copy was 1.270589 times profnath again. So clearly at least one of the sellers was setting their price algorithmically in response to changes in the other’s price…