14–17 Oct 2019

Executive Briefing: A look at the future of online pricing and algorithm-led collusion

Rebecca Gu (Electron), Cris Lowery (Baringa Partners)
11:0511:45 Thursday, 17 October 2019
Location: Windsor Suite
Secondary topics:  Reinforcement Learning
Average rating: ****.
(4.33, 3 ratings)

Who is this presentation for?

  • Management and automated pricing developers and legal, regulatory, and compliance experts

Level

Beginner

Description

In a future world with widespread adoption of algorithmic pricing, cooperation between firms to raise prices may be easier than ever. Rebecca Gu and Cris Lowery set out to demonstrate how reinforcement learning algorithms can be constructed to reach a collusive outcome. In a world where the definition of prohibited behavior is anchored on human intent, what are governments likely to do?

Rebecca and Cris build a Q-learner algorithm and demonstrate how, even under extremely innocent conditions, it can reach a collusive outcome in a virtual marketplace. They explore what new analytical tools might be needed to address concerns and what future regulation might look like.

Prerequisite knowledge

  • A basic understanding of reinforcement learning algorithms

What you'll learn

  • Understand how pricing algorithms have changed the digital marketplace, why governments are currently worried about these changes, the ethics and legal challenges of regulating algorithms, what makes an algorithm more or less concerning, and how this will change in the future
Photo of Rebecca Gu

Rebecca Gu

Electron

Rebecca Gu is a senior project manager at Electron, where she’s building blockchain-based digital infrastructure for the energy industry. Previously, Rebecca was an economist at Baringa Partners, where she wrote a discussion paper on the topic of algorithmic pricing. On the human side, she’s brought forward economic evidence in the first UK High Court case to go to trial for damages against a cartelist. On the machine side, her interest lies in how machine learning and AI are changing what we might consider cartels. Machine learning is also broadly changing the way we shop, the way firms price, and how governments and industry should work together to face these challenges.

Photo of Cris Lowery

Cris Lowery

Baringa Partners

Cristobal Lowery is a senior manager and team lead for Baringa Partners’s modeling and machine learning centre of excellence, where he led the creation of Baringa’s data science and analytics team and supported our clients in their journeys to become leaders in artificial intelligence. Previously, he was an independent data science consultant in an investment bank and for a leading Formula 1 team. Cristobal is a passionate advocate of artificial intelligence and its potential to transform businesses. He holds two first-class master’s degrees in quantitative subjects and has published and patented a machine learning system.

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