Study: Airbnb Smart Pricing algorithm exacerbates racial inequality
Airbnb's 'Smart Pricing' algorithm inadvertently exacerbates racial inequality, according to researchers. 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, and had been found to reduce racial disparties. Prior to its launch, white Airbnb hosts e arned significantly more than Black hosts , partly due to properties owned by Black hosts having 20 percent less demand than similar white-owned properties . However, Carnegie Mellon professor Param Vir Singh and his team of researchers discovered that White hosts appeared to prefer using the algorithm more than Black ones, thereby unintentionally widening existing real-world racial discrepancies. Th e episode highlighted the unintended consequences of algorithms and the importance of considering user adoption when designing such tools . System 🤖 Airbnb Smart Pricing Developer: Airbnb Country: USA Sector: Travel/hospitality Purpose: Determine price Technology: Dynamic pr icing; Pricing algorithm Issue: Bias/discrimination
- Date it happened
- 2021-05-01
- Organisation involved
- Airbnb
- Product, system or model
- Smart Pricing
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