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Algorithmic Collusion is Algorithm Orchestration

Author

Listed:
  • Cesare Carissimo
  • Fryderyk Falniowski
  • Siavash Rahimi
  • Heinrich Nax

Abstract

We propose a fresh `meta-game' perspective on the problem of algorithmic collusion in pricing games a la Bertrand. Economists have interpreted the fact that algorithms can learn to price collusively as tacit collusion. We argue instead that the co-parametrization of algorithms, in ways as are necessary to obtain algorithmic collusion, typically requires algorithm designers to engage in some form of explicit collusion or `algorithm orchestration.' In our model, the algorithm designers play a meta-game of parametrizing their algorithms, which then play repeated Bertrand competition. The strategic analysis at the meta-level reveals new equilibrium and collusion phenomena. (JEL: C62, C63, D43, L13)

Suggested Citation

  • Cesare Carissimo & Fryderyk Falniowski & Siavash Rahimi & Heinrich Nax, 2025. "Algorithmic Collusion is Algorithm Orchestration," Papers 2508.14766, arXiv.org, revised Dec 2025.
    • Handle: RePEc:arx:papers:2508.14766
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    References listed on IDEAS

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    1. Waltman, Ludo & Kaymak, Uzay, 2008. "Q-learning agents in a Cournot oligopoly model," Journal of Economic Dynamics and Control, Elsevier, vol. 32(10), pages 3275-3293, October.
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    More about this item

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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