Artificial Collusion: Examining Supracompetitive Pricing by Q-learning Algorithms

Arnoud V. den Boer, Janusz M. Meylahn and Maarten Pieter Schinkel
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Arnoud V. den Boer: University of Amsterdam
Janusz M. Meylahn: University of Twente
Maarten Pieter Schinkel: University of Amsterdam

No 22-067/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We examine recent claims that a particular Q-learning algorithm used by competitors ‘autonomously’ and systematically learns to collude, resulting in supracompetitive prices and extra profits for the firms sustained by collusive equilibria. A detailed analysis of the inner workings of this algorithm reveals that there is no immediate reason for alarm. We set out what is needed to demonstrate the existence of a colluding price algorithm that does form a threat to competition.

Keywords: keywords (search for similar items in EconPapers)
JEL-codes: C63 K21 L13 L44 (search for similar items in EconPapers)
Date: 2022-09-21
New Economics Papers: this item is included in nep-big, nep-cmp, nep-com, nep-ind, nep-law and nep-reg
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20220067

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