[roenxi]

And that observation makes the article doubly weird:

1) Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated.

2) The technical economic term for this collusion is probably something like 'efficient market price', where the sellers have agreed on what the fair price is to offer their service.

Collusion can't mean that the sellers all have an implicitly coordinated price, because the market is always going to settle on an implicitly coordinated price if conditions aren't changing.

Collusion is something like companies agreeing to strategically offer and not offer services to control their competitors. Like, maybe FedEx has a deal where they refuse to carry online goods that aren't bought from Amazon (don't ask me how to implement that), that would be collusion. I'm not getting a service for my online store because there is an exclusionary deal amongst the big players.

[doctorpangloss]

> The technical economic term for this collusion is probably something like 'efficient market price'

That's definitely untrue. I mean, clearly an order book shows many sellers with different opinions about what a fair price is, but it would seem reasonable that the price in between the bid and the ask is a close approximation of the efficient market price.

> Collusion can't mean that the sellers all have an implicitly coordinated price, because the market is always going to settle on an implicitly coordinated price if conditions aren't changing.

That's also pretty untrue, or so pedantic as to be meaningless. Clearly when orders are fulfilled on a proper bid/ask market, conditions aren't changing in any fundamental sense but the price definitely does.

You're really stuck applying Econ 101 in one of the worst places, retail. Your line of thinking has been completely co-opted by a very specific kind of consumption--buying all your things from the same few stores--where producers benefit from collusion, meaning coordinating pricing, at the zero-sum expense of consumers.

Ordinary consumers could buy their goods at auction, or from artisans, or in pre-sales. Those are much better examples of situations where secular trends could sometimes show the symptoms of collusion without actual collusion. But sellers on Amazon? C'mon man, sellers coordinate prices via implicit information exchange on Amazon in a way that, if they were allowed to, they would just collude straightforwardly to do so.

[Hydraulix989]

> That's definitely untrue.

I think he meant Efficient Market Hypothesis, which could be posed as a strategy.

> That's also pretty untrue, or so pedantic as to be meaningless.

It's still collusion.

> You're really stuck applying Econ 101 in one of the worst places, retail.

This is Game Theory, not Econ 101. I also think it's one of the best places.

> But sellers on Amazon? C'mon man, sellers coordinate prices via implicit information exchange on Amazon in a way that, if they were allowed to, they would just collude straightforwardly to do so.

I've seen it happen. I've even seen collusion with online reviews on there.

[evrydayhustling]

Most coordinated equilibria results depend on facing the same competitors repeatedly - partly to learn an equilibrium that is influenced by each player's private preferences, and partly because repeated play introduces consequences for defecting from that equilibrium. The more you expect to see the same opponents again, the more you have to gain for colluding, and the more you have to lose from defecting.

So, the most interesting aspect of AI pricing might not be the AI - humans could probably learn to collude with the same setup. It's the fact that AI enables orders of magnitude more pricing decisions, so bots spend less time discovering or defecting from equilibrium, and more time sharing maximum collective profit from customers.

[Hydraulix989]

> Nobody needs an AI to figure out Tit-for-Tat is a good strategy. It isn't complicated.

That's true for the iterated prisoner's dilemma. It's also pretty non-intuitive. It was formalized in 1980 which is cutting-edge for mathematics.

I think collusion can also be using real-time pricing updates as a communications channel. Collusion could even be the Nash equilibrium -- in which case, yes, that's the efficient market (I believe).

[sooheon]

> Collusion can't mean that the sellers all have an implicitly coordinated price.

Why? Obviously explicitly coordinating prices is collusion. Implicitly coordinated prices depends on nobody else defecting to a lower price point. If enough players have a tit-for-tat strategy, sellers can converge to a higher than market price, trivially. This is far from a 'efficient market price' derived from perfect information.

[bonyt]

I’ve heard the line between collusion and conscious parallelism, viewed from the outside, described like this: A group of people leave a building and all open their umbrellas at the same time. If it’s raining, that’s conscious parallelism. If it’s not raining, that’s collusion.

[fauigerzigerk]

This explanation misses the key point almost entirely. Obviously, if there is an external reason for everyone to do the same thing, it is probably not collusion.

But there doesn't have to be an external cause for it not to be collusion. If all kebab shop owners in a neighbourhood charge exactly the same price for a kebab, because each of them has decided individually that charging more or less than the others would put them at a disadvantage, then that is not collusion.

Everyone opening their umbrellas when it's not raining doesn't have to be collusion either. It could just as well be fashion for instance.

Collusion requires an agreement to act in a certain coordinated way. Drawing the line is difficult when there is a silent agreement based on tradition or fear or whatever.