Big data may mean higher online prices

My first graduate microeconomics class didn't start with any grand theories or mathematical proofs. It started with a demonstration. The professor marched us down to a computer lab, divided us into groups of six, and had us participate in a simulated market.

Amazingly, the price of the virtual commodity we were trading quickly converged to a single value and stayed there. This was a powerful demonstration of the so-called law of one price, the economic principle that markets produce a single price for a given commodity or good.

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A version of this article appeared in the print edition of The Straits Times on March 14, 2018, with the headline 'Big data may mean higher online prices'. Subscribe