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Airbnb’s Smart Pricing: All-Inclusive Algorithm Leads To Racial Disparity

Analysis of Airbnb’s data reveals the low adoption rate of its Smart Pricing algorithm among black hosts, leading to racial disparity.
Airbnb smart pricing
A supposed money-making algorithm by vacation rental company Airbnb has led to an increase in revenue divide between black and white hosts.  Airbnb had introduced a property 'Smart Pricing' algorithm in 2015 to suggest optimal prices and reduce the revenue gap between black and white hosts. As per the US federal laws, all algorithms have to exclude any discriminatory factors, like race, to make recommendations. And so did Airbnb's algorithm. In many aspects, it was similar to the pricing algorithms used by Amazon and eBay. However, research conducted by the Universities of Harvard, Toronto and Carnegie Mellon suggests otherwise. The research involved collecting and analysing data from randomly selected 9396 properties over 324 zip codes between July 2015 and August 2017. It further
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Picture of Meenal Sharma
Meenal Sharma
I am a journalism undergrad who loves playing basketball and writing about finance and technology. I believe in the power of words.
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