Algorithmic pricing

Alright kiddo, so algorithmic pricing is when a computer program figures out how much something should cost instead of a person doing it. This is used a lot in online shopping to make prices change according to different things, like how much demand there is for a product or how much it costs to make the product.

So let's say there's a toy that a lot of people want to buy. The computer program might notice that and decide to raise the price a little bit so the company can make more money. But if the toy isn't selling very well, the program might lower the price to try to get more people interested in buying it.

This can happen really quickly - even multiple times a day - without anyone having to manually change the price. The computer program does all the work behind the scenes.

But some people worry that this can make prices unfair, especially if the program is always raising the price just because the demand is high. So some countries have rules to make sure companies aren't doing anything shady with algorithmic pricing.

Does that make sense, little one?