Pith Number

pith:MDN3OWE6

pith:2026:MDN3OWE6LKZNCJT7VGZ6XZJG3C

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Misspecified Explore-then-Exploit Leads to Supra-Competitive Prices

Farrell Wu, Jackie Baek, Vivek F. Farias

Firms using explore-then-exploit pricing with misspecified demand models converge to prices above the Nash equilibrium.

arxiv:2605.16064 v1 · 2026-05-15 · cs.GT · cs.AI · econ.TH

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\pithnumber{MDN3OWE6LKZNCJT7VGZ6XZJG3C}

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Record completeness

1 Bitcoin timestamp

2 Internet Archive

3 Author claim open · sign in to claim

4 Citations open

5 Replications open

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The bundle contains the canonical record plus signed events. A mirror can host it anywhere and recompute the same current state with the deterministic merge algorithm.

Claims

C1strongest claim

The explore-then-exploit pipeline converges to supra-competitive prices above the Nash equilibrium when firms explore within similar price ranges on the same side of the Nash price; prices can reach monopoly levels under symmetric exploration.

C2weakest assumption

That the demand estimation step uses a misspecified monopoly-style model that omits competitors' prices and that exploration occurs within similar ranges on the same side of the Nash price.

C3one line summary

Misspecified explore-then-exploit pricing with monopoly-style demand estimation leads to supra-competitive prices when firms explore similar price ranges on the same side of the Nash price.

References

31 extracted · 31 resolved · 0 Pith anchors

[1] I. Abada and X. Lambin. Artificial intelligence: Can seemingly collusive outcomes be avoided? Management Science, 69 0 (9): 0 5042--5065, 2023 2023

[2] I. Abada, X. Lambin, and N. Tchakarov. Collusion by mistake: Does algorithmic sophistication drive supra-competitive profits? European Journal of Operational Research, 318 0 (3): 0 927--953, 2024 2024

[3] A. Aouad and A. V. den Boer. Algorithmic collusion in assortment games. Available at SSRN 3930364 , 2021 2021

[4] E. R. Arunachaleswaran, N. Collina, S. Kannan, A. Roth, and J. Ziani. Algorithmic collusion without threats. arXiv preprint arXiv :2409.03956 , 2024 2024

[5] J. Asker, C. Fershtman, and A. Pakes. Artificial intelligence, algorithm design, and pricing. AEA Papers and Proceedings , 112: 0 452--456, 2022 2022

Formal links

1 machine-checked theorem link

Cited by

1 paper in Pith

Should Demand Models Incorporate Competitor Prices? Oblivious Learning and Algorithmic Collusion

Receipt and verification

First computed	2026-05-20T00:01:51.212457Z
Builder	pith-number-builder-2026-05-17-v1
Signature	Pith Ed25519 (`pith-v1-2026-05`) · public key
Schema	pith-number/v1.0

Canonical hash

60dbb7589e5ab2d1267fa9b3ebe526d8a45f36eed26c0de8ff1a4b6403099534

Aliases

arxiv: 2605.16064 · arxiv_version: 2605.16064v1 · doi: 10.48550/arxiv.2605.16064 · pith_short_12: MDN3OWE6LKZN · pith_short_16: MDN3OWE6LKZNCJT7 · pith_short_8: MDN3OWE6

Agent API

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Verify this Pith Number yourself

curl -sH 'Accept: application/ld+json' https://pith.science/pith/MDN3OWE6LKZNCJT7VGZ6XZJG3C \
  | jq -c '.canonical_record' \
  | python3 -c "import sys,json,hashlib; b=json.dumps(json.loads(sys.stdin.read()), sort_keys=True, separators=(',',':'), ensure_ascii=False).encode(); print(hashlib.sha256(b).hexdigest())"
# expect: 60dbb7589e5ab2d1267fa9b3ebe526d8a45f36eed26c0de8ff1a4b6403099534

Canonical record JSON

{
  "metadata": {
    "abstract_canon_sha256": "7c322200b12bcd2fd83a0b800ed49f8e703c16962cbf608b083c965a6850b277",
    "cross_cats_sorted": [
      "cs.AI",
      "econ.TH"
    ],
    "license": "http://creativecommons.org/licenses/by/4.0/",
    "primary_cat": "cs.GT",
    "submitted_at": "2026-05-15T15:29:23Z",
    "title_canon_sha256": "8ae9641f9437dafe973f1fa613319c47ecb849c091ec696c6bd39468b1fe8f0f"
  },
  "schema_version": "1.0",
  "source": {
    "id": "2605.16064",
    "kind": "arxiv",
    "version": 1
  }
}