Algorithmic Collusion or Algorithmic Confusion? Rethinking the Risks of AI Pricing for Companies and Policymakers

Concerns about algorithmic collusion often are driven by the belief that increasingly sophisticated artificial intelligence (AI) systems likely will learn to collude autonomously.

Ai Deng reviews a growing body of academic literature suggesting a more nuanced insight. Across studies of AI pricing algorithms, supercompetitive prices frequently arise from limitations in algorithm design, challenging the assumption that smarter algorithms necessarily increase antitrust risk. These findings have important implications for how supercompetitive pricing is interpreted and how risks associated with AI pricing are assessed by policymakers, regulators, and companies.