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July–August 2023
Article

Demand Learning and Pricing for Varying Assortments

By: Kris Ferreira and Emily Mower

Problem Definition: We consider the problem of demand learning and pricing for retailers who offer assortments of substitutable products that change frequently, e.g., due to limited inventory, perishable or time-sensitive products, or the retailer’s desire to... View Details

Keywords: Experiments; Pricing And Revenue Management; Retailing; Demand Estimation; Pricing Algorithm; Marketing; Price; Demand and Consumers; Mathematical Methods

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2023
Working Paper

Algorithm Failures and Consumers' Response: Evidence from Zillow

By: Isamar Troncoso, Runshan Fu, Nikhil Malik and Davide Proserpio

In November 2021, Zillow announced the closure of its iBuyer business. Popular media largely attributed this to a failure of its proprietary forecasting algorithm. We study the response of consumers to Zillow’s iBuyer business closure. We show that after the iBuyer... View Details

Keywords: Algorithmic Pricing; Price; Forecasting and Prediction; Consumer Behavior; Real Estate Industry

June 2023
Simulation

Artea Dashboard and Targeting Policy Evaluation

By: Ayelet Israeli and Eva Ascarza

Companies deploy A/B experiments to gain valuable insights about their customers in order to answer strategic business problems. In marketing, A/B tests are often used to evaluate marketing interventions intended to generate incremental outcomes for the firm. The Artea... View Details

May 2023
Technical Note

Dynamic Pricing: Timing is Everything

This note provides a comprehensive exposition to the topic of dynamic pricing (whereby the fee customers are charged is time-dependent). It covers the motivation for firms to engage in dynamic pricing, provides a typology of the main formats dynamic pricing can take,... View Details

Keywords: Dynamic Pricing; Price

2024
Working Paper

Adjusting Prices in the Long-tail: The Role of Competitive Monitoring

By: Ayelet Israeli and Eric Anderson

Most e-commerce retailers offer a long-tail of very low demand products. Individually, these items may have low sales but collectively they are critical to the overall e-commerce business model. Because of their minimal sales, pricing is a constant challenge. The... View Details

Keywords: Algorithmic Pricing; Ecommerce; Price Monitoring; Price; Competition; Retail Industry

2022
Working Paper

Algorithmic Assortment Curation: An Empirical Study of Buybox in Online Marketplaces

By: Santiago Gallino, Nil Karacaoglu and Antonio Moreno

Most online sales worldwide take place in marketplaces that connect sellers and buyers. The presence of numerous third-party sellers leads to a proliferation of listings for each product, making it difficult for customers to choose between the available options. Online... View Details

Keywords: Algorithms; E-commerce; Sales; Digital Marketing; Internet and the Web; Customer Satisfaction

September 2022 (Revised November 2022)
Teaching Note

PittaRosso: Artificial Intelligence-Driven Pricing and Promotion

By: Ayelet Israeli

Teaching Note for HBS Case No. 522-046. View Details

August 2022
Supplement

Zalora: Data-Driven Pricing Recommendations

By: Ayelet Israeli

This exercise can be used in conjunction with the main case "Zalora: Data-Driven Pricing" to facilitate class discussion without requiring data analysis from the students. Instead, the exercise presents reports that were created by the data science team to answer the... View Details

Keywords: Pricing; Pricing Algorithms; Dynamic Pricing; Ecommerce; Pricing Strategy; Pricing And Revenue Management; Apparel; Singapore; Startup; Demand Estimation; Data Analysis; Data Analytics; Exercise; Price; Internet and the Web; Apparel and Accessories Industry; Retail Industry; Fashion Industry; Singapore

May 2022 (Revised June 2024)
Case

LOOP: Driving Change in Auto Insurance Pricing

By: Elie Ofek and Alicia Dadlani

John Henry and Carey Anne Nadeau, co-founders and co-CEOs of LOOP, an insurtech startup based in Austin, Texas, were on a mission to modernize the archaic $250 billion automobile insurance market. They sought to create equitably priced insurance by eliminating pricing... View Details

Keywords: AI and Machine Learning; Technological Innovation; Equality and Inequality; Prejudice and Bias; Growth and Development Strategy; Customer Relationship Management; Price; Insurance Industry; Financial Services Industry

November 2021 (Revised December 2021)
Supplement

PittaRosso (B): Human and Machine Learning

By: Ayelet Israeli

This case supplements the "PittaRosso: Artificial Intelligence-Driven Pricing and Promotion" case, and provides major highlights on what happened at the company since the first case. View Details

October 2021 (Revised March 2022)
Supplement

PittaRosso: Artificial Intelligence-Driven Pricing and Promotion

By: Ayelet Israeli and Fabrizio Fantini

PittaRosso, a traditional Italian shoe retailer, is implementing an AI system to provide pricing and promotion recommendations. The system allows them to implement changes that would affect both the top of funnel and bottom of funnel activities for the company: once... View Details

October 2021 (Revised June 2022)
Case

PittaRosso: Artificial Intelligence-Driven Pricing and Promotion

By: Ayelet Israeli

PittaRosso, a traditional Italian shoe retailer, is implementing an AI system to provide pricing and promotion recommendations. The system allows them to implement changes that would affect both the top of funnel and bottom of funnel activities for the company: once... View Details

September–October 2021
Article

Frontiers: Can an AI Algorithm Mitigate Racial Economic Inequality? An Analysis in the Context of Airbnb

By: Shunyuan Zhang, Nitin Mehta, Param Singh and Kannan Srinivasan

We study the effect of Airbnb’s smart-pricing algorithm on the racial disparity in the daily revenue earned by Airbnb hosts. Our empirical strategy exploits Airbnb’s introduction of the algorithm and its voluntary adoption by hosts as a quasi-natural experiment. Among... View Details

Keywords: Smart Pricing; Pricing Algorithm; Machine Bias; Discrimination; Racial Disparity; Social Inequality; Airbnb Revenue; Revenue; Race; Equality and Inequality; Prejudice and Bias; Price; Mathematical Methods; Accommodations Industry

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September 17, 2021
Article

AI Can Help Address Inequity—If Companies Earn Users' Trust

By: Shunyuan Zhang, Kannan Srinivasan, Param Singh and Nitin Mehta

While companies may spend a lot of time testing models before launch, many spend too little time considering how they will work in the wild. In particular, they fail to fully consider how rates of adoption can warp developers’ intent. For instance, Airbnb launched a... View Details

Keywords: Artificial Intelligence; Algorithmic Bias; Technological Innovation; Perception; Diversity; Equality and Inequality; Trust; AI and Machine Learning

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November 2020
Teaching Note

DayTwo: Going to Market with Gut Microbiome

By: Ayelet Israeli

Teaching Note for HBS Case No. 519-010. DayTwo is a young Israeli startup that applies research on the gut microbiome and machine learning algorithms to deliver personalized nutritional recommendations to its users in order to minimize blood sugar spikes after meals.... View Details

Oct 2020
Conference Presentation

Optimal, Truthful, and Private Securities Lending

By: Emily Diana, Michael J. Kearns, Seth Neel and Aaron Leon Roth

We consider a fundamental dynamic allocation problem motivated by the problem of securities lending in financial markets, the mechanism underlying the short selling of stocks. A lender would like to distribute a finite number of identical copies of some scarce resource... View Details

Keywords: Differential Privacy; Mechanism Design; Finance; Mathematical Methods

September 2020 (Revised July 2022)
Technical Note

Algorithmic Bias in Marketing

By: Ayelet Israeli and Eva Ascarza

This note focuses on algorithmic bias in marketing. First, it presents a variety of marketing examples in which algorithmic bias may occur. The examples are organized around the 4 P’s of marketing – promotion, price, place and product—characterizing the marketing... View Details

September 2020 (Revised June 2023)
Exercise

Artea: Designing Targeting Strategies

By: Eva Ascarza and Ayelet Israeli

This collection of exercises aims to teach students about 1)Targeting Policies; and 2)Algorithmic bias in marketing—implications, causes, and possible solutions. Part (A) focuses on A/B testing analysis and targeting. Parts (B),(C),(D) Introduce algorithmic bias. The... View Details

2019
Article

More Amazon Effects: Online Competition and Pricing Behaviors

By: Alberto Cavallo

I study how online competition, with its shrinking margins, algorithmic pricing technologies, and the transparency of the web, can change the pricing behavior of large retailers in the U.S. and affect aggregate inflation dynamics. In particular, I show that in the past... View Details

Keywords: Amazon; Online Prices; Inflation; Uniform Pricing; Price Stickiness; Monetary Economics; Economics; Macroeconomics; Inflation and Deflation; System Shocks; United States

March 2019
Case

DayTwo: Going to Market with Gut Microbiome

By: Ayelet Israeli and David Lane

DayTwo is a young Israeli startup that applies research on the gut microbiome and machine learning algorithms to deliver personalized nutritional recommendations to its users in order to minimize blood sugar spikes after meals. After a first year of trial rollout in... View Details

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