There are two big players in the world of high-end art auctions, and maybe you've heard of them,

Christie's and Sotheby's.

And the way that the business often works, if you're a person with a valuable artwork to sell,

is that you talk to both houses, and you see who will give you the best terms, the highest sale

guarantee, the lowest fees. It's a very pure and direct form of competition, even if there's only

two real operators. If you have something they want, you can see who wants your business more

to your advantage. So what would happen if those two players decide not to play fair?

This unfortunately happened in the 1990s. The chairman of each house allegedly secretly got

together to fix commission rates and raise prices, costing customers something like

$100 million over several years.

The Justice Department noticed, and one of them went to jail,

and the other one couldn't set foot in the United States again.

This kind of collusion against consumers is indeed against the law.

It's subject to the Sherman Antitrust Act in the U.S. and other laws abroad,

and it's been used to bust animal feed additive manufacturers, airlines, and other industries, where competitors decide that they can raise

prices for everyone and make more money if they stop being competitors. But collusion doesn't

necessarily need a shady backroom handshake to hand us all a raw deal.

Sometimes it can just sort of happen algorithmically.

Welcome to the Quantum Podcast where we explore the frontiers of fundamental science and math.

I'm Samir Patel, editor-in-chief of Quantum Magazine.

This all seems like a very economic subject, which isn't usually our domain at Quanta,

but we are interested in algorithms, and a lot of prices that we see today are set by them,

...