Artificial Collusion: Examining Supracompetitive Pricing by Q-learning Algorithms

Artificial Collusion: Examining Supracompetitive Pricing by Q-learning Algorithms

By:	Arnoud V. den Boer (University of Amsterdam); Janusz M. Meylahn (University of Twente); Maarten Pieter Schinkel (University of Amsterdam)
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.
URL:	http://d.repec.org/n?u=RePEc:tin:wpaper:20220067&r=