Making of a Fly

While watching a TED video about algorithms, mention was made of an unrealistic price on Amazon. Apparently two retailers had an out-of-control computer feedback loop.

One company, with lots of good customer points, is in the habit of selling products a little higher than the competition. Anyone’s guess why, but facts are facts – they routinely price merchandise about 25% higher than the competition (and rely on the customer experience points to pull customers away?).

Well, the competition routinely prices merchandise a little lower than the highest priced competitor: about 1% less.

So these computer programs began a game of one-upmanship. A $10.00 product was listed for $12.70 by the first company. Later in the day, the second company’s computer listed the same product for 1% less – $12.57. So the process repeated:  $15.96 and $15.80. Then $20.07 and $1987. The process continued until the book was listed for $23,698,655.93, plus shipping. (all numbers illustrative)

This story illustrates one of the challenges to automated feedback loops. An engineering instructor once explained it – if the gain feedback is a positive value greater than 1, the feedback will either oscillate, or latch-up.

More on feedback controls for real systems another day.

Read more here: https://www.google.com/#q=making+of+a+fly

About Mark Reynolds 37 Articles
Master of Engineering professional experienced as engineer, architect, manager, mentor and evangelist. Accomplished Architect demonstrating proactive application of digital technologies and agile methodologies balanced between engineering, development, automation, adaptive processing, and distributed systems. Solution Evangelist with recognized command of processes, distributed systems, analytics, machine learning, and multiple digital technologies. Mentor, Professor and Lifelong Learner teaching internal educational projects, university computer science, industry conferences.