Related papers: The Illusion of Collusion
Nowadays, a significant share of the Business-to-Consumer sector is based on online platforms like Amazon and Alibaba and uses Artificial Intelligence for pricing strategies. This has sparked debate on whether pricing algorithms may tacitly…
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…
As algorithms increasingly mediate competitive decision-making, their influence extends beyond individual outcomes to shaping strategic market dynamics. In two preregistered experiments, we examined how algorithmic advice affects human…
We study collaborative learning in multi-agent Bayesian bandit problems, where strategic agents collectively solve the same bandit instance. While multiple agents can accelerate learning by sharing information, strategic agents might prefer…
Most online platforms strive to learn from interactions with users, and many engage in exploration: making potentially suboptimal choices for the sake of acquiring new information. We study the interplay between exploration and competition:…
Bandit learning is characterized by the tension between long-term exploration and short-term exploitation. However, as has recently been noted, in settings in which the choices of the learning algorithm correspond to important decisions…
Algorithmic pricing raises a question of interpretation as well as intervention: when autonomous deep-learning pricing systems sustain supracompetitive prices, what strategic pattern have they learned, and how might market institutions…
This paper examines how the observability of demand shocks influences pricing patterns and market outcomes when firms delegate pricing decisions to Q-learning algorithms. Simulations show that demand observability induces Q-learning agents…
We examine the dynamics of informational efficiency in a market with asymmetrically informed, boundedly rational traders who adaptively learn optimal strategies using simple multiarmed bandit (MAB) algorithms. The strategies available to…
Algorithmic collusion is an emerging concept in current artificial intelligence age. Whether algorithmic collusion is a creditable threat remains as an argument. In this paper, we propose an algorithm which can extort its human rival to…
The prospect of collusive agreements being stabilized via the use of pricing algorithms is widely discussed by antitrust experts and economists. However, the literature is often lacking the perspective of computer scientists, and seems to…
We explore the behaviour emerging from learning agents repeatedly interacting strategically for a wide range of learning dynamics, including $Q$-learning, projected gradient, replicator and log-barrier dynamics. Going beyond the better…
When online sellers use AI learning algorithms to automatically compete on e-commerce platforms, there is concern that they will learn to coordinate on higher than competitive prices. However, this concern was primarily raised in…
We study the propensity of independent algorithms to collude in repeated Cournot duopoly games. Specifically, we investigate the predictive power of different oligopoly and bargaining solutions regarding the effect of asymmetry between…
There is growing experimental evidence that $Q$-learning agents may learn to charge supracompetitive prices. We provide the first theoretical explanation for this behavior in infinite repeated games. Firms update their pricing policies…
LLM agents in markets present algorithmic collusion risks. While prior work shows LLM agents reach supracompetitive prices through tacit coordination, existing research focuses on hand-crafted prompts. The emerging paradigm of prompt…
Recent work shows that pricing with symmetric LLM agents leads to algorithmic collusion. We show that collusion is fragile under the heterogeneity typical of real deployments. In a stylized repeated-pricing model, heterogeneity in patience…
This paper examines how data inputs shape competition among artificial intelligences (AIs) in pricing games. The dataset assigns labels to consumers and divides them into different markets, thereby inducing multimarket contact among AIs. We…
Autonomous pricing algorithms are increasingly influencing competition in digital markets; however, their behavior under realistic demand conditions remains largely unexamined. This paper offers a thorough analysis of four pricing…
We develop a model of algorithmic pricing that shuts down every channel for explicit or implicit collusion while still generating collusive outcomes. We analyze the dynamics of a duopoly market where both firms use pricing algorithms…