Emergent Effective Collusion in an Economy of Perfectly Rational Competitors

Details Emergent Effective Collusion in an Economy of Perfectly Rational Competitors Emergent Effective Collusion in an Economy of Perfectly Rational Competitors

2004-11-03

arxiv.org/abs/nlin/0411006v1

Nonlinear Sciences

Adaptation and Self-Organizing Systems

To appear in proceedings Complex Systems '04 and Complexity International

Scientific paper

We consider a simple model of rational agents competing in a single product market described by simple linear demand curve. Contrary to accepted economic theory, the agents' production levels synchronise in the absence of conscious collusion, leading to a downward spiraling of market total production until the monopoly price level is realised. This is in stark contrast to the standard predictions of an ideal rational competitive market. Some form of randomness in the form of agent irrationality, or non-synchronous updates is needed to break this emergent "collusion"

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