DP16393 Algorithmic collusion, genuine and spurious

Author(s): Emilio Calvano, Giacomo Calzolari, Vincenzo Denicolò, Sergio Pastorello
Publication Date: July 2021
Keyword(s): artificial intelligence, Collusion, exploration, Reinforcement Learning
JEL(s): D43, D83, L13, L41
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16393

We clarify the difference between the asynchronous pricing algorithms analyzed by Asker, Fershtman and Pakes (2021) and those considered in the previous literature. The difference lies in the way the algorithms explore: randomly or mechanically. We reaffirm that with random exploration, asynchronous pricing algorithms learn genuinely collusive strategies.