Discussion paper
DP18808 Efficiently Breaking the Folk Theorem by Reliably Communicating Long Term Commitments
Abstract The introduction of artificially intelligent algorithms in pricing decisions by firms has triggered a literature in industrial organization asking if the use of these algorithms will lead to collusive outcomes. In a simple repeated game environment it is shown that if algorithms can be reliably communicated or inferred the folk theorem breaks and the long-run outcome must be collusive.
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