Last spring, a young biologist tried to buy a copy of a common but out-of-print reference work, Peter Lawrence’s The Making of a Fly. Amazon offered 15 used copies at reasonable prices – and two new copies, the cheapest of which was $1,730,045.91, plus $3.99 shipping.
Michael Eisen, an evolutionary biologist at UC Berkeley, heard the tale and tried to figure out what was going on. It can’t have been a prank – there were two sellers involved, both with thousands of satisfied customers. Eisen heard that many prices on Amazon were set by computers, and suspected this might be the reason.
The next day, both prices had risen to around $2.8m. By the end of the day, the higher-priced copy was on offer for $3,536,675.57. Eisen began to figure out what was happening. One seller, profnath, would set its price to fractionally undercut the best price available, once per day. The other seller, bordeebook, would discover this after a few hours and reset its price to be 1.270589 times higher than profnath’s price. Over time bordeebook would keep raising its price and profnath would shadow the price rises, always undercutting them. Eventually, the spiral stopped – presumably a human intervened – but not before bordeebook was offering The Making of a Fly for a mere $23,698,655.93, plus $3.99 shipping.