"Algorithm" has got to be the least useful word in English today.
It isn't the software that's responsible driving up prices, it's the information.
> Yet a widely cited 2019 paper (opens a new tab) showed that algorithms could learn to collude tacitly, even when they weren’t programmed to do so. A team of researchers pitted two copies of a simple learning algorithm against each other in a simulated market, then let them explore different strategies for increasing their profits. Over time, each algorithm learned through trial and error to retaliate when the other cut prices — dropping its own price by some huge, disproportionate amount. The end result was high prices, backed up by mutual threat of a price war.
This is nonsense. Those "algorithms" were programed to do that. I also notice they didn't add a third copy of the algorithm or a fourth. The summary of this research is that they built a novel algorithm (not one used in practice) and put it in a simulation. How this is representative of any real world scenario escapes me. They proved that software written to optimize profits optimizes profits. Shocking.
The researchers quoted in the article are, essentially, defining collusion as knowing what competitors prices are.
> The researchers quoted in the article are, essentially, defining collusion as knowing what competitors prices are.
It really is just another display about how injured the concept of "collusion" always was. Plenty of competitors have met in smokey rooms in order to fix prices, but you don't actually have to speak to each other to agree that if all of you can maximize your profits together, you should. Everybody knows how much everybody else is charging.
The ideal competition myth only works in a fictional zero-cost startup, zero-cost supplier, zero-cost distribution scenario. In real life if you try to enter a market with a few competitors with super high margins, they'll just threaten to freeze anybody who buys from you or sells to you out of the market, then offer you a ticket into their cartel.
Doesn't make it not evil, though, and it doesn't mean it's not an essential function of government to stop it. Government can't allow powerful little subgovernments to build up. You might as well allow paramilitary militias.
>"Algorithm" has got to be the least useful word in English today.
On the contrary, it's the word that's going to justify balkanization and government control of speech on the web. It's spooky magic that controls people's minds to most people. You know we're cooked when it becomes common on HN of all places to claim that "algorithmic feeds" should be illegal because they're the source of all society's ills, toxicity and political dissent.