AI AND INTERDEPENDENT PRICING: COMBINATION WITHOUT CONSPIRACY?
By Joshua P. Davis and Anupama K. Reddy1
Artificial Intelligence (AI) holds the potential to change our landscape in many ways. Some of them are positive. AI may empower automobiles to drive themselves, greatly reducing traffic accidents2 and freeing up our time to pursue other tasks. It may be able to detect cancerâor its absenceâfar better than radiologists can, saving lives and avoiding unnecessary surgeries.3 It can help us to identify remedies for viruses and perhaps greatly accelerate our development of vaccines. The list goes on and on.
But AI also has the potential to cause great harm. One place that harm may take place is in the marketplace. AI is a great player of games. It has defeated the world chess champion.4 It has done the same to the world champion of Go,5 a game with even more permutations. Market participants may be able to harness AI’s game-playing power to cause market distortions to their benefit. That possibility and how to deal with it are the topics of this article.