Artificial intelligence, algorithmic pricing, and collusion

Remember your last online purchase? Chances are, the price you paid was not set by humans but rather by a software algorithm. Unlike the traditional revenue management systems long in use by such businesses as airlines and hotels, in which the programmer remains effectively in charge of the strategic choices, the pricing programs that are now emerging are much more'autonomous'. These new algorithms adopt the same logic as the artificial intelligence (AI) programs that have recently attained superhuman performances in complex strategic environments such as the game of Go or chess. That is, the algorithm is instructed by the programmer only about the aim of the exercise – winning the game, say, or generating the highest possible profit.