Algorithmic Collusion is Algorithm Orchestration

Cesare Carissimo, Fryderyk Falniowski, Siavash Rahimi and Heinrich Nax

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Abstract: This paper proposes 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 -- that we show is necessary to obtain algorithmic collusion -- requires algorithm designer(s) to engage in explicit collusion by algorithm orchestration. To highlight this, we model a meta-game of algorithm parametrization that is played by algorithm designers, and the relevant strategic analyses at that level reveal new equilibrium and collusion phenomena.

Date: 2025-08
New Economics Papers: this item is included in nep-ain, nep-com and nep-mic
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