Machine economies

Eduard Hartwich (), Alexander Rieger (), Johannes Sedlmeir (), Dominik Jurek () and Gilbert Fridgen ()
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Eduard Hartwich: University of Luxembourg
Alexander Rieger: University of Luxembourg
Johannes Sedlmeir: University of Luxembourg
Dominik Jurek: University of California
Gilbert Fridgen: University of Luxembourg

Electronic Markets, 2023, vol. 33, issue 1, No 36, 13 pages

Abstract: Abstract This fundamentals article discusses efficient machine economies in which non-human agents can autonomously exchange information and value. We first identify criteria for achieving Pareto efficiency in such economies by drawing on the Coase Theorem. We then translate these economic criteria to technical requirements before developing a framework that characterizes four types of machine economies. We discuss real-life examples for each type to highlight key challenges in achieving Pareto efficiency. In particular, we highlight that machine economies with human involvement in economic interactions and governance face significant challenges regarding perfect information, rationality, and transaction costs. Machine economies without human involvement, in turn, promise a high degree of Pareto efficiency, but there are still many open questions, particularly regarding machine-enforced governance. We conclude with opportunities for future research on the interactions and governance in machine economies.

Keywords: Algorithmic governance; Autonomous agents; Digital platform; Economic efficiency; Machine economy; Transaction costs (search for similar items in EconPapers)
JEL-codes: D01 D40 D49 D50 D52 D60 D80 D81 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s12525-023-00649-0

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