We show that these empirical observations can be rationalized by a simple model where a monopolist firm with incomplete information about the demand function invests in AI pricing to acquire information. Here is a picture of how our model explains the data!

Moreover, firms that adopted AI pricing experienced faster growth in sales, employment, assets, and markups, and their stock returns are also more sensitive to high-frequency monetary policy surprises than non-adopters.

At the firm level, larger and more productive firms are more likely to adopt AI pricing.

At the aggregate level, the share of AI pricing jobs in all pricing jobs has increased by more than tenfold since 2010. The increase in AI pricing jobs has been broad-based, spreading to more industries than other AI jobs.

First Post! New Paper Alert: "The Rise of AI Pricing: Trends, Driving Forces, and Implications for Firm Performance." (ssrn.com/abstract=500...) with @jonathanjadams.com, Zheng Liu, and Yajie Wang. We are excited to share it with anyone jointly interested in AI and pricing! #EconSky