How Pricing Algorithms Can Lead to Higher Prices Through Algorithmic Collusion

Summary

The article explores how pricing algorithms, even simple ones, can lead to higher consumer prices through algorithmic collusion without explicit human coordination. It discusses game theory principles showing how algorithms can learn to maintain high prices through repeated interactions, creating a form of tacit collusion that may evade traditional antitrust laws. The piece examines the legal and economic implications of this phenomenon, where algorithms can achieve outcomes similar to illegal price-fixing but through automated decision-making processes.