Algorithmic Collusion is Algorithm Orchestration
Theoretical Economics
2025-12-16 v2 Computer Science and Game Theory
Abstract
We propose a fresh `meta-game' perspective on the problem of algorithmic collusion in pricing games a la Bertrand. Economists have interpreted the fact that algorithms can learn to price collusively as tacit collusion. We argue instead that the co-parametrization of algorithms, in ways as are necessary to obtain algorithmic collusion, typically requires algorithm designers to engage in some form of explicit collusion or `algorithm orchestration.' In our model, the algorithm designers play a meta-game of parametrizing their algorithms, which then play repeated Bertrand competition. The strategic analysis at the meta-level reveals new equilibrium and collusion phenomena. (JEL: C62, C63, D43, L13)
Cite
@article{arxiv.2508.14766,
title = {Algorithmic Collusion is Algorithm Orchestration},
author = {Cesare Carissimo and Fryderyk Falniowski and Siavash Rahimi and Heinrich Nax},
journal= {arXiv preprint arXiv:2508.14766},
year = {2025}
}