Recent findings reveal that even simple pricing algorithms can make things more expensive. Imagine a town with two widget merchants. Customers prefer cheaper widgets, so the merchants must compete to set the lowest price. Unhappy with their meager profits, they meet one night in a smoke-filled tavern to discuss a secret plan: If they raise prices together instead of competing, they can both make more money. But that kind of intentional price-fixing, called collusion, has long been illegal.

Numerical experiments are provided to support our results.

We study a two-sided market, wherein, price-sensitive heterogeneous customers and servers arrive and join their respective queues. A compatible customer-server pair can then be matched by the platform, at which point, they leave the system. Our objective is to design pricing and matching algorithms that maximize the platform's profit, while maintaining reasonable queue lengths. As the demand and supply curves governing the price-dependent arrival rates may not be known in practice, we design a novel online-learning-based pricing policy and establish its near-optimality. In particular, we prove a tradeoff among three performance metrics: $\tilde{O}(T^{1-γ})$ regret, $\tilde{O}(T^{γ/2})$ average queue length, and $\tilde{O}(T^γ)$ maximum queue length for $γ\in (0, 1/6]$, significantly improving over existing results [1]. Moreover, barring the permissible range of $γ$, we show that this trade-off between regret and average queue length is optimal up to logarithmic factors under a class of policies, matching the optimal one as in [2] which assumes the demand and supply curves to be known. Our proposed policy has two noteworthy features: a dynamic component that optimizes the tradeoff between low regret and small queue lengths; and a probabilistic component that resolves the tension between obtaining useful samples for fast learning and maintaining small queue lengths.

Neural Information Processing Systems http://nips.cc/

The rise of autonomous pricing systems has sparked growing concern over algorithmic collusion in markets from retail to housing. This paper examines controlled information quality as an ex ante policy lever: by reducing the fidelity of data that pricing algorithms draw on, regulators can frustrate collusion before supracompetitive prices emerge. We show, first, that information quality is the central driver of competitive outcomes, shaping prices, profits, and consumer welfare. Second, we demonstrate that collusion can be slowed or destabilized by injecting carefully calibrated noise into pooled market data, yielding a feasibility region where intervention disrupts cartels without undermining legitimate pricing. Together, these results highlight information control as a lightweight yet practical lever to blunt digital collusion at its source.

The increasing deployment of Artificial Intelligence (AI) and other autonomous algorithmic systems presents the world with new systemic risks. While focus often lies on the function of individual algorithms, a critical and underestimated danger arises from their interactions, particularly when algorithmic systems operate without awareness of each other, or when those deploying them are unaware of the full algorithmic ecosystem deployment is occurring in. These interactions can lead to unforeseen, rapidly escalating negative outcomes - from market crashes and energy supply disruptions to potential physical accidents and erosion of public trust - often exceeding the human capacity for effective monitoring and the legal capacities for proper intervention. Current governance frameworks are inadequate as they lack visibility into this complex ecosystem of interactions. This paper outlines the nature of this challenge and proposes some initial policy suggestions centered on increasing transparency and accountability through phased system registration, a licensing framework for deployment, and enhanced monitoring capabilities.

Context. As software systems become more integrated into society's infrastructure, the responsibility of software professionals to ensure compliance with various non-functional requirements increases. These requirements include security, safety, privacy, and, increasingly, non-discrimination. Motivation. Fairness in pricing algorithms grants equitable access to basic services without discriminating on the basis of protected attributes. Method. We replicate a previous empirical study that used black box testing to audit pricing algorithms used by Italian car insurance companies, accessible through a popular online system. With respect to the previous study, we enlarged the number of tests and the number of demographic variables under analysis. Results. Our work confirms and extends previous findings, highlighting the problematic permanence of discrimination across time: demographic variables significantly impact pricing to this day, with birthplace remaining the main discriminatory factor against individuals not born in Italian cities. We also found that driver profiles can determine the number of quotes available to the user, denying equal opportunities to all. Conclusion. The study underscores the importance of testing for non-discrimination in software systems that affect people's everyday lives. Performing algorithmic audits over time makes it possible to evaluate the evolution of such algorithms. It also demonstrates the role that empirical software engineering can play in making software systems more accountable.

Collusion in market pricing is a concept associated with human actions to raise market prices through artificially limited supply. Recently, the idea of algorithmic collusion was put forward, where the human action in the pricing process is replaced by automated agents. Although experiments have shown that collusive market equilibria can be reached through such techniques, without the need for human intervention, many of the techniques developed remain susceptible to exploitation by other players, making them difficult to implement in practice. In this article, we explore a situation where an agent has a multi-objective strategy, and not only learns to unilaterally exploit market dynamics originating from other algorithmic agents, but also learns to model the behaviour of other agents directly. Our results show how common critiques about the viability of algorithmic collusion in real-life settings can be overcome through the usage of slightly more complex algorithms.

Algorithmic agents are used in a variety of competitive decision settings, notably in making pricing decisions in contexts that range from online retail to residential home rentals. Business managers, algorithm designers, legal scholars, and regulators alike are all starting to consider the ramifications of "algorithmic collusion." We study the emergent behavior of multi-armed bandit machine learning algorithms used in situations where agents are competing, but they have no information about the strategic interaction they are engaged in. Using a general-form repeated Prisoner's Dilemma game, agents engage in online learning with no prior model of game structure and no knowledge of competitors' states or actions (e.g., no observation of competing prices). We show that these context-free bandits, with no knowledge of opponents' choices or outcomes, still will consistently learn collusive behavior - what we call "naive collusion." We primarily study this system through an analytical model and examine perturbations to the model through simulations. Our findings have several notable implications for regulators. First, calls to limit algorithms from conditioning on competitors' prices are insufficient to prevent algorithmic collusion. This is a direct result of collusion arising even in the naive setting. Second, symmetry in algorithms can increase collusion potential. This highlights a new, simple mechanism for "hub-and-spoke" algorithmic collusion. A central distributor need not imbue its algorithm with supra-competitive tendencies for apparent collusion to arise; it can simply arise by using certain (common) machine learning algorithms. Finally, we highlight that collusive outcomes depend starkly on the specific algorithm being used, and we highlight market and algorithmic conditions under which it will be unknown a priori whether collusion occurs.

Dynamic pricing is a promising strategy to address the challenges of smart charging, as traditional time-of-use (ToU) rates and stationary pricing (SP) do not dynamically react to changes in operating conditions, reducing revenue for charging station (CS) vendors and affecting grid stability. Previous studies evaluated single objectives or linear combinations of objectives for EV CS pricing solutions, simplifying trade-offs and preferences among objectives. We develop a novel formulation for the dynamic pricing problem by addressing multiple conflicting objectives efficiently instead of solely focusing on one objective or metric, as in earlier works. We find optimal trade-offs or Pareto solutions efficiently using Non-dominated Sorting Genetic Algorithms (NSGA) II and NSGA III. A dynamic pricing model quantifies the relationship between demand and price while simultaneously solving multiple conflicting objectives, such as revenue, quality of service (QoS), and peak-to-average ratios (PAR). A single method can only address some of the above aspects of dynamic pricing comprehensively. We present a three-part dynamic pricing approach using a Bayesian model, multi-objective optimization, and multi-criteria decision-making (MCDM) using pseudo-weight vectors. To address the research gap in CS pricing, our method selects solutions using revenue, QoS, and PAR metrics simultaneously. Two California charging sites' real-world data validates our approach.