Emergent Effective Collusion in an Economy of Perfectly Rational Competitors

2004/11/03 by Russell K. Standish, Steve Keen, Standish, Russell K. +1
Economics, Econometrics and Finance · #Adaptation and Self-Organizing Systems (nlin.AO) #Complex Systems and Time Series Analysis #Economic Theory and Institutions #Economic theories and models #FOS: Economics and business #FOS: Physical sciences #General Finance (q-fin.GN)

paper · pdf · doi:10.48550/arxiv.nlin/0411006

openalex publication_date 2004/11/03 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28

Abstract

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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