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Artificial Intelligence (AI) and Algorithms Are Frequently Used To Adjust Prices In Real Time
By David Carlucci
Inflation has been one of the defining economic concerns for New Yorkers over the past year. In multiple public polls during 2025, it ranked as the top issue for voters, ahead of crime, housing, and immigration.
Most conversations about inflation focus on interest rates, government spending, and supply chains. But another factor has increasingly entered the discussion: the growing use of artificial intelligence and algorithms to adjust prices in real time.
Often called dynamic pricing, this technology allows businesses to change prices automatically based on factors such as demand, time of day, inventory levels, or consumer behavior. As these systems become more common across industries, policymakers are beginning to look more closely at how the technology works and where it is being used.
The Basics
Dynamic pricing uses computer algorithms to update prices continuously rather than keeping them fixed. These systems analyze large sets of data such as purchasing patterns, supply levels, and consumer demand and then determine the price a customer sees at the moment of purchase.
The goal is to allow businesses to respond quickly to changing market conditions without needing to manually adjust prices.
In practice, this means the price of a product or service may vary depending on when it is purchased, how many people are buying it, or how much inventory remains.
Where People Already See It
Many consumers have encountered dynamic pricing for years, particularly in travel.
Airlines and hotels routinely adjust prices based on demand and booking patterns. A flight purchased months in advance may cost significantly less than the same flight booked the day before departure.
Governments also use similar concepts. Congestion pricing programs, for example, adjust roadway charges during peak traffic periods in order to manage traffic flow.
More recently, the practice has gained attention in the entertainment industry. Ticket prices for concerts, sporting events, and major tournaments increasingly change based on demand during the sales process.
That debate has been particularly visible with upcoming FIFA World Cup matches scheduled for the New York–New Jersey region.
Ticketing and the Resale Debate
The discussion around ticket prices has also intersected with a broader debate about ticket resale markets.
Live Nation Entertainment and its ticketing platform Ticketmaster have argued that resale platforms are a significant factor in rising ticket prices and have supported policy proposals aimed at limiting resale activity.
In New York, legislation addressing resale prices has been introduced by James Skoufis. The proposal, known as S8221A, would place limits on the prices at which tickets can be resold.
At the federal level, the Federal Trade Commission has filed a lawsuit involving Live Nation and Ticketmaster that alleges the company’s platform allows scalpers to inflate prices.
These developments illustrate how multiple factors—including resale markets and algorithm-driven pricing—are now part of the broader policy discussion about ticket costs.
Moving Into Everyday Commerce
Dynamic pricing is no longer limited to travel or entertainment.
Restaurants have begun experimenting with time-based pricing, where menu prices may vary depending on reservation times or peak dining hours.
In grocery stores, some chains are introducing Electronic Shelf Labels digital price displays that allow retailers to update prices quickly across multiple locations. These systems connect to centralized pricing software and allow stores to adjust prices in response to inventory levels or supplier costs.
For businesses, the technology can reduce labor associated with manually changing prices and allow stores to respond more quickly to supply-chain changes.
For shoppers, it can mean prices that change more frequently than they have in the past.
Policy Discussions in Albany and New York City
As the technology spreads, lawmakers in Albany and the New York City Council have begun discussing possible policy responses.
Some of the proposals being discussed focus on transparency—such as whether businesses should disclose when algorithm-driven pricing systems are being used.
Another topic under discussion is whether essential goods, such as groceries, should be treated differently from discretionary purchases like concert tickets or entertainment events.
These conversations are taking place as policymakers continue to look for ways to address concerns about affordability and consumer pricing.
Looking Ahead
Dynamic pricing technology is expanding across the economy as artificial intelligence tools become more widely integrated into commerce. Businesses view the systems as a way to respond quickly to supply and demand. Policymakers are examining how the technology fits within existing consumer protection frameworks.
As the use of algorithm-driven pricing continues to grow, discussions about transparency, oversight, and consumer awareness are likely to remain part of the broader policy conversation.
David Carlucci consults organizations on navigating government and securing funding. He served for ten years in the New York Senate.
