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0 pointsslg1y ago0 comments

>Im not sure i understand how AI matters here.

It says it right in the article's subtitle:

>Software the U.S. government says is illegal gives landlords ability to coordinate rent hikes.

The AI (in this instance "AI" just means "a blackbox algorithm") is basically an excuse to provide plausible deniability on market collusion. Combine this with the relatively inelastic nature of the demand for housing, it creates an avenue for abuse. Without the AI, you don't have collusion meaning increased competition will produce a lower and fairer market price.

0 comments

refurb1y ago

But the point stands.

If rents are inelastic, you dont need collusion? You just charge as much as you want?

slgOP1y ago

That is why I said "relatively inelastic". Raise the price too high and eventually you won't fill the unit because some other landlord will relent and stop raising their price in order to get their unit rented. This is basically the foundation of market theory. Collusion stops people from relenting and makes the market more like a monopoly which gives that side power to manipulate the market price.

refurb1y ago

> Raise the price too high and eventually you won't fill the unit because some other landlord will relent and stop raising their price in order to get their unit rented.

Ahhh, ok, so why wouldn't this happen even with AI?

Isn't the population of landlord's heterogenous? Some landlord's are happy to leave their units empty for a year, while others don't want to leave it empty between tenants?

So in that case, even with collusion, you'd have some landlord's undercutting other landlords?

dgfitz1y ago

What if, sincerely asking, the market can’t stay stable or lower rents because it has all been overleveraged?

2 more replies

dools1y ago

I think perhaps one of the issues might be that price hikes would be more readily co-ordinated across regions. As such, a system that knows it is putting up prices in an area from which people will likely move, can simultaneously recommend putting up prices in the area to which those people would otherwise have moved to escape higher prices.

yieldcrv1y ago

Its accurate that landlords have always had the ability to gamble on the highest possible rent hike

Its also accurate that social pressure on the landlord has always been an option, as opposed to disdain of the nomadic people that are interested in paying the given hiked rate

Chrisoaks1y ago

Not true.

Even a perfectly inelastic (vertical) demand curve still intersects the supply curve at some price.

In other words, even if I would pay infinite dollars for a widget, I would still purchase from the cheapest supplier.

j / k navigate · click thread line to collapse

0 pointsslg1y ago0 comments

>Im not sure i understand how AI matters here.

It says it right in the article's subtitle:

>Software the U.S. government says is illegal gives landlords ability to coordinate rent hikes.

0 comments

refurb1y ago

But the point stands.

If rents are inelastic, you dont need collusion? You just charge as much as you want?

slgOP1y ago

refurb1y ago

> Raise the price too high and eventually you won't fill the unit because some other landlord will relent and stop raising their price in order to get their unit rented.

Ahhh, ok, so why wouldn't this happen even with AI?

Isn't the population of landlord's heterogenous? Some landlord's are happy to leave their units empty for a year, while others don't want to leave it empty between tenants?

So in that case, even with collusion, you'd have some landlord's undercutting other landlords?

dgfitz1y ago

What if, sincerely asking, the market can’t stay stable or lower rents because it has all been overleveraged?

2 more replies

dools1y ago

yieldcrv1y ago

Its accurate that landlords have always had the ability to gamble on the highest possible rent hike

Its also accurate that social pressure on the landlord has always been an option, as opposed to disdain of the nomadic people that are interested in paying the given hiked rate

Chrisoaks1y ago

Not true.

Even a perfectly inelastic (vertical) demand curve still intersects the supply curve at some price.

In other words, even if I would pay infinite dollars for a widget, I would still purchase from the cheapest supplier.

j / k navigate · click thread line to collapse