Airbnb 'Smart Pricing' algorithm racism
Updated: December 2021
The Financial Times reports on a Carnegie Mellon University study which finds that Airbnb's Smart Pricing algorithm is exacerbating racial inequality. Launched in 2015, the algorithm dynamically adjusts the cost of a night’s stay based on demand and allows hosts to set a minimum price.
However, the researchers discovered that White hosts appeared to prefer using the algorithm more than Black ones, thereby widening racial discrepancies. Carnegie Mellon professor Param Vir Singh points in the paper to the unintended consequences of well-meaning algorithms.
Purpose: Determine price
Technology: Pricing algorithm
Issue: Bias/discrimination - race
Opacity: Governance; Black box