Side not: Is it illegal for independent contractors to collude on freelance platforms like Fever? Or could this be considered a trade union?
I guess even the machines want a union.
Artificial intelligence, algorithmic pricing, and collusion
41–50 of 57 posts
Re: Artificial intelligence, algorithmic pricing, and collusion
#42This reminds me of the "Tit for Tat" results of simulations of the prisoners' dilemma[1][2], where cooperating strategies won over competing ones. It also reminds me of Colossus: The Forbin Project [3], a science-fiction movie from 1970 in which a supercomputer in the US and one in the Soviet Union learn to communicate with one another in ways incomprehensible to their human creators and together rule the Earth. [1]…
This reminds me of what happened in a game I used to play called 'RoboWar'... it was a game where you programmed robots to fight each other in simulated battles. They held these big tournaments every year.
However, at some points players realized that the scoring gave 1 point for a victory, but also 1 point for a tie (you got a point for surviving a round, whether it ended in a draw or a victory). This lead to a 'pacifist alliance' where robots wouldn't fight unless the other robot also fought. Since both robots would get a point every round, the non-pacifist robots had no chance to compete.
Really interesting outcome to a scoring rule. (Which they fixed by giving an additional point for a kill)
http://robowar.sourceforge.net/RoboWar5/Theory/theory.html#A...
Re: Artificial intelligence, algorithmic pricing, and collusion
#43Earlier quoted context omitted.
I’m not aware of any definition of the word collusion, legal or otherwise, that doesn’t require an agreement between parties. I can’t see how you can have collusion without colluding.
'Tacit collusion' is a real concept; as far as I can tell (as very much a non-expert) it is legal in the US, but there's some ambiguity in the EU. This (paywalled unless you have academic access) journal article looks very relevant: https://academic.oup.com/jeclap/advance-article-abstract/doi... , and there's a blog post by the author here: https://www.law.ox.ac.uk/business-law-blog/blog/2019/02/tack...
Tacit collusion still requires a tacit agreement. From your linked article:
>In an article published in the Journal of European Competition Law & Practice, I argue that such an approach would amount to a reversal of the burden of proof under existing case law, in particular on the prohibition of coordinated facilitating practices. Indeed, following the current position of the Court, in order to establish the existence of a collusive agreement solely on the basis of circumstantial evidence (such as the uniform adoption of an alleged facilitating practice), and without proof of reciprocal contact through direct or indirect communication, the existence of any plausible and legitimate alternative explanation must be ruled out.
Re: Artificial intelligence, algorithmic pricing, and collusion
#44This reminds me of the "Tit for Tat" results of simulations of the prisoners' dilemma[1][2], where cooperating strategies won over competing ones. It also reminds me of Colossus: The Forbin Project [3], a science-fiction movie from 1970 in which a supercomputer in the US and one in the Soviet Union learn to communicate with one another in ways incomprehensible to their human creators and together rule the Earth. [1]…
And that observation makes the article doubly weird: 1) Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated. 2) The technical economic term for this collusion is probably something like 'efficient market price', where the sellers have agreed on what the fair price is to offer their service. Collusion can't mean that the sellers all have an implicitly coordinated price, because the ma…
I’ve heard the line between collusion and conscious parallelism, viewed from the outside, described like this: A group of people leave a building and all open their umbrellas at the same time. If it’s raining, that’s conscious parallelism. If it’s not raining, that’s collusion.
Re: Artificial intelligence, algorithmic pricing, and collusion
#45It does not even have to be AI. If there is an area where the bulk of humans contact a single agency to decide their prices for them and that agency then tells every caller the same price (adjusted for quality differences), then you will get this style of collusion. The agency can merely claim it is doing research on competitors to set prices, which is almost true since it looks at the prices it has told others to ch…
Even without agency, for e.g. fees determination during a blocks duration in bitcoin. It seems as though it is another name for 'free market'??
Re: Artificial intelligence, algorithmic pricing, and collusion
#46This reminds me of the "Tit for Tat" results of simulations of the prisoners' dilemma[1][2], where cooperating strategies won over competing ones. It also reminds me of Colossus: The Forbin Project [3], a science-fiction movie from 1970 in which a supercomputer in the US and one in the Soviet Union learn to communicate with one another in ways incomprehensible to their human creators and together rule the Earth. [1]…
And that observation makes the article doubly weird: 1) Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated. 2) The technical economic term for this collusion is probably something like 'efficient market price', where the sellers have agreed on what the fair price is to offer their service. Collusion can't mean that the sellers all have an implicitly coordinated price, because the ma…
> The technical economic term for this collusion is probably something like 'efficient market price'
That's definitely untrue. I mean, clearly an order book shows many sellers with different opinions about what a fair price is, but it would seem reasonable that the price in between the bid and the ask is a close approximation of the efficient market price.
> Collusion can't mean that the sellers all have an implicitly coordinated price, because the market is always going to settle on an implicitly coordinated price if conditions aren't changing.
That's also pretty untrue, or so pedantic as to be meaningless. Clearly when orders are fulfilled on a proper bid/ask market, conditions aren't changing in any fundamental sense but the price definitely does.
You're really stuck applying Econ 101 in one of the worst places, retail. Your line of thinking has been completely co-opted by a very specific kind of consumption--buying all your things from the same few stores--where producers benefit from collusion, meaning coordinating pricing, at the zero-sum expense of consumers.
Ordinary consumers could buy their goods at auction, or from artisans, or in pre-sales. Those are much better examples of situations where secular trends could sometimes show the symptoms of collusion without actual collusion. But sellers on Amazon? C'mon man, sellers coordinate prices via implicit information exchange on Amazon in a way that, if they were allowed to, they would just collude straightforwardly to do so.
Re: Artificial intelligence, algorithmic pricing, and collusion
#47This is not new, it was already discovered (and also theoretically explained) by Steve Keen & Russel Standish (2006):"Profit Maximization, Industry Structure, and Competition: A critique of neoclassical theory". You don't really need AI to that.
Also, Alan Blinder's book Asking About Prices confirms this (and other things) in practice.
Re: Artificial intelligence, algorithmic pricing, and collusion
#48Somewhat related, there's a great book, Twenty Lectures on Algorithmic Game Theory:
https://www.amazon.com/dp/131662479X
https://theory.stanford.edu/~tim/f13/l/l1.pdf
Re: Artificial intelligence, algorithmic pricing, and collusion
#49Earlier quoted context omitted.
And that observation makes the article doubly weird: 1) Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated. 2) The technical economic term for this collusion is probably something like 'efficient market price', where the sellers have agreed on what the fair price is to offer their service. Collusion can't mean that the sellers all have an implicitly coordinated price, because the ma…
I’ve heard the line between collusion and conscious parallelism, viewed from the outside, described like this: A group of people leave a building and all open their umbrellas at the same time. If it’s raining, that’s conscious parallelism. If it’s not raining, that’s collusion.
This explanation misses the key point almost entirely. Obviously, if there is an external reason for everyone to do the same thing, it is probably not collusion.
But there doesn't have to be an external cause for it not to be collusion. If all kebab shop owners in a neighbourhood charge exactly the same price for a kebab, because each of them has decided individually that charging more or less than the others would put them at a disadvantage, then that is not collusion.
Everyone opening their umbrellas when it's not raining doesn't have to be collusion either. It could just as well be fashion for instance.
Collusion requires an agreement to act in a certain coordinated way. Drawing the line is difficult when there is a silent agreement based on tradition or fear or whatever.
Re: Artificial intelligence, algorithmic pricing, and collusion
#50This reminds me of the "Tit for Tat" results of simulations of the prisoners' dilemma[1][2], where cooperating strategies won over competing ones. It also reminds me of Colossus: The Forbin Project [3], a science-fiction movie from 1970 in which a supercomputer in the US and one in the Soviet Union learn to communicate with one another in ways incomprehensible to their human creators and together rule the Earth. [1]…
And that observation makes the article doubly weird: 1) Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated. 2) The technical economic term for this collusion is probably something like 'efficient market price', where the sellers have agreed on what the fair price is to offer their service. Collusion can't mean that the sellers all have an implicitly coordinated price, because the ma…
> Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated.
That's true for the iterated prisoner's dilemma. It's also pretty non-intuitive. It was formalized in 1980 which is cutting-edge for mathematics.
I think collusion can also be using real-time pricing updates as a communications channel. Collusion could even be the Nash equilibrium -- in which case, yes, that's the efficient market (I believe).