Protecting consumers from collusive prices due to AI
Science, 2020, Vol. 370, No. 6520, pp. 1040-1042
CALZOLARI, Giacomo, DENICOLÒ, Vincenzo, CALVANOL, Emilio, HARRINGTON Jr., Joseph E., PASTORELLOL, Sergio, Protecting consumers from collusive prices due to AI, Science, 2020, Vol. 370, No. 6520, pp. 1040-1042 - https://hdl.handle.net/1814/69109
Retrieved from Cadmus, EUI Research Repository
The efficacy of a market system is rooted in competition. In striving to attract customers, firms are led to charge lower prices and deliver better products and services. Nothing more fundamentally undermines this process than collusion, when firms agree not to compete with one another and consequently consumers are harmed by higher prices. Collusion is generally condemned by economists and policy-makers and is unlawful in almost all countries. But the increasing delegation of price-setting to algorithms (1) has the potential for opening a back door through which firms could collude lawfully (2). Such algorithmic collusion can occur when artificial intelligence (AI) algorithms learn to adopt collusive pricing rules without human intervention, oversight, or even knowledge. This possibility poses a challenge for policy. To meet this challenge, we propose a direction for policy change and call for computer scientists, economists, and legal scholars to act in concert to operationalize the proposed change.
Published online: 27 November 2020
Cadmus permanent link: https://hdl.handle.net/1814/69109
Full-text via DOI: 10.1126/science.abe3796
ISSN: 0036-8075; 1095-9203
Publisher: American Association for the Advancement of Science
Files associated with this item
- Full-text in Open Access, Accepted ...