Learning to Mitigate AI Collusion on E-Commerce Platforms

Algorithmic pricing on online e-commerce platforms raises the concern of tacit collusion, where reinforcement learning algorithms learn to set collusive prices in a decentralized manner and through nothing more than profit feedback. We demonstrate that reinforcement learning (RL) can also be used by platforms to learn buy box rules that are effective in preventing collusion by RL sellers and to do so without reducing consumer choice. For this, we adopt the methodology of Stackelberg POMDPs, and demonstrate success in learning robust rules that continue to provide high consumer welfare together with sellers employing different behavior models or having out-of-distribution costs for goods.