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Do Algorithms Facilitate Coordination?
Michal S. Gal
University of Haifa Faculty of Law
1. Agreement
2. Detection
3. Sanction
4. High entry barriers
:Agreement
Speedier calculation
Sophisticated calculation
Rational decision
Known recipe
Strong signal
:Detection Monitor
Distinguish
Sanction: React immediately
Calculate risk Credible threat
High entry barriers must exist
“Digital Shadow” Stronger incentives But more difficult
Market sharing
Data sharing
Market Solutions? Algorithmic Consumers
"I never think of the future. It comes
soon enough..." Albert Einstein
offer more information
Identify the need
execute the transaction
game changer
Lower costs
Speedier decision
More sophisticated
Less decisional energy
Lower consumer biases
Downsides?
Cyber harms Wrong preferences
Reduction in autonomy Psychological effects
Social effects Exercising our decision muscle
Knowing our world Privacy
Anti-discrimination
Anti-collusion
Anti-concentration
Algorithmic Buyer Power Access to Users Access to Data
Domination by the big 5
Legal Questions (Agreement)
• Do algorithms that facilitate coordination fulfill the requirement of “an agreement”, and if so- under which conditions?;
• What exactly do we wish to prohibit and can we spell it out clearly for market participants?;
• Is there justification for widening the regulatory net beyond its current prohibitions, in light of the changing nature of the marketplace.
Agreement?
Simple scenario
“explicit agreement”?
Tacit Collusion
Facilitating Practices
Parallel adoption?
No justification?
Which conduct to prohibit?
Chilling effect
Areeda test
Develop red flags
Deep learning?
Widening the net
how much transparency?
Explainability?
Playing catch up...