Algorithmic Collusion is Algorithm Orchestration

Cesare Carissimo, Fryderyk Falniowski, Siavash Rahimi and Heinrich Nax

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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)

Date: 2025-08, Revised 2025-12
New Economics Papers: this item is included in nep-ain, nep-com, nep-ind, nep-mic and nep-reg
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