Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245974 
Year of Publication: 
2021
Series/Report no.: 
Discussion Papers of the Max Planck Institute for Research on Collective Goods No. 2021/11
Publisher: 
Max Planck Institute for Research on Collective Goods, Bonn
Abstract: 
We investigate collusive pricing in laboratory markets when human players interact with an algorithm. We compare the degree of (tacit) collusion when exclusively humans interact to the case of one firm in the market delegating its decisions to an algorithm. We further vary whether participants know about the presence of the algorithm. We find that threefirm markets involving an algorithmic player are significantly more collusive than human-only markets. Firms employing an algorithm earn significantly less profit than their rivals. For four-firm markets, we find no significant differences. (Un)certainty about the actual presence of an algorithm does not significantly affect collusion.
Subjects: 
algorithms
collusion
human-computer interaction
laboratory experiments
JEL: 
C90
L41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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