The Power of Algorithms and Exchange Rates in Pricing and Remittances

Feranmi Olaseinde

Feranmi Olaseinde

Nov 21, 20233 min read

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The Power of Algorithms and Exchange Rates in Pricing and Remittances

Introduction:

In today's interconnected world, where technology and global economies shape our daily lives, two recent news articles shed light on the power of algorithms and exchange rates. Amazon's reported use of a secret algorithm to manipulate prices and encourage competition, and an expert's insights on how a unified exchange rate can encourage more diaspora remittances, provide valuable lessons on the impact of these factors. Understanding their implications can help us navigate the complexities of pricing strategies and investment opportunities.

The Algorithm Behind Amazon's Pricing Strategy:

Amazon, the e-commerce giant, reportedly employed a secret algorithm named "Nessie" to inflate prices and gauge the response of competitors like Target. The algorithm monitored whether other retailers would follow suit and increase their prices as well. If they did, Amazon's algorithm would automatically revert its prices to the normal range. This strategy aimed to create a sense of urgency and scarcity, encouraging customers to make immediate purchases.

The Role of Exchange Rates in Diaspora Remittances:

An expert in the field of diaspora remittances suggests that a unified exchange rate for the dollar can greatly encourage more remittances to Nigeria. In the past, individuals sending dollars to Nigeria for investment purposes would receive a lower exchange rate, resulting in reduced value and returns. However, with a unified exchange rate, the expert highlights the potential for greater value and return on investment in Nigeria. This creates a more attractive environment for diaspora remittances, ultimately benefiting the Nigerian economy.

Connecting the Dots: Common Points and Insights:

Although seemingly unrelated, the common thread between these two articles lies in the understanding of human behavior and market dynamics. Both Amazon's algorithm and the exchange rate impact consumer decision-making and investment choices.

Algorithms and consumer behavior: Amazon's algorithm, Nessie, capitalizes on consumer psychology by creating a sense of scarcity and urgency. By monitoring competitors' pricing strategies, Amazon aims to influence consumer behavior and drive immediate purchases. This highlights the importance of understanding customer psychology and leveraging it to drive sales.

Exchange rates and investment choices: The expert's insights on a unified exchange rate for diaspora remittances demonstrate the significant impact of exchange rates on investment decisions. A favorable exchange rate can attract more investments, particularly from the diaspora, by increasing the value and returns on their investments. This emphasizes the role of exchange rates in shaping investment opportunities and the overall economic landscape.

Actionable Advice:

  • 1. For businesses: Consider leveraging algorithms to optimize pricing strategies. While it's essential to ensure transparency and fairness, understanding consumer behavior and using algorithms to create a sense of urgency can help drive sales and stay competitive in the market.
  • 2. For policymakers: Focus on creating a favorable environment for diaspora remittances by unifying exchange rates. By offering a unified exchange rate, countries can attract more investments from the diaspora, leading to increased economic growth and development.
  • 3. For individuals: Stay informed about exchange rates and their impact on investment opportunities. By keeping a close eye on exchange rate fluctuations, individuals can make informed decisions regarding international investments and maximize their returns.

Conclusion:

The power of algorithms and exchange rates in shaping pricing strategies and investment choices cannot be understated. Amazon's reported use of a secret algorithm highlights the influence of consumer behavior on pricing decisions, while the expert's insights on the impact of exchange rates on diaspora remittances demonstrate the potential for economic growth. By understanding these factors and taking actionable steps, businesses, policymakers, and individuals can navigate the ever-changing landscape of pricing and investment with greater success.

Resource:

  1. "Amazon reportedly used a secret algorithm to jack up prices", https://www.theverge.com/2023/10/3/23901840/amazon-project-nessie-algorithm-antitrust-ftc-complaint (Glasp)
  2. "Expert: How FG can encourage more diaspora remittances | TheCable", https://www.thecable.ng/expert-how-fg-can-encourage-more-diaspora-remittances/amp (Glasp)

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