01 May 2019
Please join us for a webinar on Tuesday the 7th of May 2019 at 12:00 London time i.e. 13:00 Brussels time, 14:00 Athens time. The speaker is Vincenzo Denicolò, Professor of Economics at the University of Bologna, and a Research Fellow at CEPR. The title of the talk is “Artificial intelligence, algorithmic pricing and collusion". For more info please check http://technisnet.org/
The moderator will be Dr. Andreas Panagopoulos.
The program we use to deliver webinars is called VSee and you can easily download it for free. A very short demo of VSee can be found at https://www.youtube.com/
This webinar is free and open to all. To participate and for further information, please contact Dr. Andreas Panagopoulos at least a day prior to the seminar.
Abstract: Increasingly, pricing algorithms are supplanting human decision making in real marketplaces. To inform the competition policy debate on the possible consequences of this development, we conduct an experimental study of pricing algorithms powered by Artificial Intelligence (Q-learning) in a workhorse oligopoly model of price competition with logit demand and constant marginal costs. We find that the algorithms consistently learn to charge supra-competitive prices, without communicating with one another and without having been instructed to do so. The high prices are sustained by classical collusive strategies with a finite phase of punishment followed by a gradual return to cooperation. This finding is robust to asymmetries in cost or demand, changes in the number of players, and various forms of uncertainty.