Strategic choice of price-setting algorithms:
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| Main Authors: | , , , |
|---|---|
| Format: | Electronic eBook |
| Language: | English |
| Published: |
Stuttgart, Germany
University of Hohenheim, Dean's Office of the Faculty of Business, Economics and Social Sciences
2023
Hohenheim Kommunikations-, Informations- und Medienzentrum der Universität Hohenheim 2023 |
| Series: | Hohenheim discussion papers in business, economics and social sciences
2023,01 |
| Subjects: | |
| Links: | https://nbn-resolving.de/urn:nbn:de:bsz:100-opus-21276 http://opus.uni-hohenheim.de/volltexte/2023/2127/ https://hdl.handle.net/10419/268721 https://nbn-resolving.org/urn:nbn:de:bsz:100-opus-21276 https://d-nb.info/1280397918/34 |
| Abstract: | Recent experimental simulations have shown that autonomous pricing algorithms are able to learn collusive behavior and thus charge supra-competitive prices without being explicitly programmed to do so. These simulations assume, however, that both firms employ the identical price-setting algorithm based on Q-learning. Thus, the question arises whether the underlying assumption that both firms employ a Q-learning algorithm can be supported as an equilibrium in a game where firms can chose between different pricing rules. Our simulations show that when both firms use a learning algorithm, the outcome is not an equilibrium when alternative price setting rules are available. In fact, simpler price setting rules as for example meeting competition clauses yield higher payoffs compared to Q-learning algorithms. |
| Physical Description: | 6 Seiten |
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| 520 | 3 | |a Recent experimental simulations have shown that autonomous pricing algorithms are able to learn collusive behavior and thus charge supra-competitive prices without being explicitly programmed to do so. These simulations assume, however, that both firms employ the identical price-setting algorithm based on Q-learning. Thus, the question arises whether the underlying assumption that both firms employ a Q-learning algorithm can be supported as an equilibrium in a game where firms can chose between different pricing rules. Our simulations show that when both firms use a learning algorithm, the outcome is not an equilibrium when alternative price setting rules are available. In fact, simpler price setting rules as for example meeting competition clauses yield higher payoffs compared to Q-learning algorithms. | |
| 653 | 0 | |a pricing algorithms | |
| 653 | 0 | |a algorithmic collusion | |
| 653 | 0 | |a reinforcement learning | |
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| 700 | 1 | |a Schwalbe, Ulrich |d 1958- |e Verfasser |0 (DE-588)170440710 |4 aut | |
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| id | DE-604.BV049026562 |
| illustrated | Not Illustrated |
| indexdate | 2025-04-08T08:01:06Z |
| institution | BVB |
| language | English |
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| publisher | University of Hohenheim, Dean's Office of the Faculty of Business, Economics and Social Sciences Kommunikations-, Informations- und Medienzentrum der Universität Hohenheim |
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| series2 | Hohenheim discussion papers in business, economics and social sciences |
| spelling | Buchali, Katrin Verfasser (DE-588)1235896927 aut Strategic choice of price-setting algorithms Katrin Buchali, Jens Grüb, Matthias Muijs, Ulrich Schwalbe Stuttgart, Germany University of Hohenheim, Dean's Office of the Faculty of Business, Economics and Social Sciences 2023 Hohenheim Kommunikations-, Informations- und Medienzentrum der Universität Hohenheim 2023 6 Seiten txt rdacontent c rdamedia cr rdacarrier Hohenheim discussion papers in business, economics and social sciences 2023,01 Recent experimental simulations have shown that autonomous pricing algorithms are able to learn collusive behavior and thus charge supra-competitive prices without being explicitly programmed to do so. These simulations assume, however, that both firms employ the identical price-setting algorithm based on Q-learning. Thus, the question arises whether the underlying assumption that both firms employ a Q-learning algorithm can be supported as an equilibrium in a game where firms can chose between different pricing rules. Our simulations show that when both firms use a learning algorithm, the outcome is not an equilibrium when alternative price setting rules are available. In fact, simpler price setting rules as for example meeting competition clauses yield higher payoffs compared to Q-learning algorithms. pricing algorithms algorithmic collusion reinforcement learning Grüb, Jens Verfasser (DE-588)1202935397 aut Muijs, Matthias Verfasser (DE-588)1172742693 aut Schwalbe, Ulrich 1958- Verfasser (DE-588)170440710 aut Hohenheim discussion papers in business, economics and social sciences 2023,01 2023,01 application/pdf https://nbn-resolving.de/urn:nbn:de:bsz:100-opus-21276 Resolving-System kostenfrei application/pdf http://opus.uni-hohenheim.de/volltexte/2023/2127/ Verlag kostenfrei Volltext https://hdl.handle.net/10419/268721 Resolving-System kostenfrei https://nbn-resolving.org/urn:nbn:de:bsz:100-opus-21276 Resolving-System kostenfrei https://d-nb.info/1280397918/34 Langzeitarchivierung Nationalbibliothek kostenfrei |
| spellingShingle | Buchali, Katrin Grüb, Jens Muijs, Matthias Schwalbe, Ulrich 1958- Strategic choice of price-setting algorithms Hohenheim discussion papers in business, economics and social sciences |
| title | Strategic choice of price-setting algorithms |
| title_auth | Strategic choice of price-setting algorithms |
| title_exact_search | Strategic choice of price-setting algorithms |
| title_full | Strategic choice of price-setting algorithms Katrin Buchali, Jens Grüb, Matthias Muijs, Ulrich Schwalbe |
| title_fullStr | Strategic choice of price-setting algorithms Katrin Buchali, Jens Grüb, Matthias Muijs, Ulrich Schwalbe |
| title_full_unstemmed | Strategic choice of price-setting algorithms Katrin Buchali, Jens Grüb, Matthias Muijs, Ulrich Schwalbe |
| title_short | Strategic choice of price-setting algorithms |
| title_sort | strategic choice of price setting algorithms |
| url | https://nbn-resolving.de/urn:nbn:de:bsz:100-opus-21276 http://opus.uni-hohenheim.de/volltexte/2023/2127/ https://hdl.handle.net/10419/268721 https://nbn-resolving.org/urn:nbn:de:bsz:100-opus-21276 https://d-nb.info/1280397918/34 |
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