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Efficiently Breaking the Folk Theorem by Reliably Communicating Long Term Commitments

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  • Levine, David

Abstract

The introduction of artificially intelligent algorithms in pricing decisions by firms has triggered a literature in industrial organization asking if the use of these algorithms will lead to collusive outcomes. In a simple repeated game environment it is shown that if algorithms can be reliably communicated or inferred the folk theorem breaks and the long-run outcome must be collusive.

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  • Levine, David, 2024. "Efficiently Breaking the Folk Theorem by Reliably Communicating Long Term Commitments," CEPR Discussion Papers 18808, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18808
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