Machine Economies Econpapers

Working Papers Journal Articles Books and Chapters Software Components EconPapers FAQ Archive maintainers FAQ Cookies at EconPapers The RePEc blog The RePEc plagiarism page Eduard Hartwich (Obfuscate( 'uni.lu', 'eduard.hartwich' )), Alexander Rieger (Obfuscate( 'uni.lu', 'alexander.rieger' )), Johannes Sedlmeir (Obfuscate( 'uni.lu', 'johannes.sedlmeir' )), Dominik Jurek (Obfuscate( 'berkeley.edu', 'dominik_jurek' )) and Gilbert Fridgen (Obfuscate( 'uni.lu', 'gilbert.fridgen' )) Additional contact information... Electronic Markets, 2023, vol. 33, issue 1, No 36, 13 pages

You have full access to this open access article 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. Avoid common mistakes on your manuscript. Digital technologies continuously evolve, transform, and merge to create innovative ways of economic interaction, not only between machines and humans but also among machines themselves. As a result, “interconnected machines, software and [digital] processes" (Arthur , 2017, p. 3) are increasingly facilitating and shifting value exchange into virtual economies.

Algorithmic trading is one of many examples. It relies on software agents that autonomously observe market movements, automatically make decisions, and submit and execute orders. In effect, these software agents are fully-fledged market participants. In many instances, algorithmic trading agents have become so relevant that they account for most of the trading volume and liquidity provided on several exchanges (Hendershott et al., 2021; Moriyasu et al., 2018). These developments are not exclusive to financial services. Autonomous agents also play an important role as value creators and contributors on digital platforms (Hein et al., 2020).

For instance, the Amazon AWS IoT platform allows machines to share wear and tear data and to automatically order new parts (Amazon Web Services, 2022). Moreover, the recent improvements in artificial intelligence may lead to an increasing number of business decisions being made by software agents with little or no human oversight (Berente et al., 2021). In these and many other cases, machines engage in economic interactions, creating what can be described as a machine economy. ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online) Working Papers Journal Articles Books and Chapters Software Components EconPapers FAQ Archive maintainers FAQ Cookies at EconPapers

The RePEc blog The RePEc plagiarism page No 1139, CEPR Discussion Papers from C.E.P.R. Discussion Papers Abstract: This paper models technology adoption as replacing workers by machines, which perform the same job in the production process. The paper shows that such modelling of technology adoption affects significantly the analysis of economic growth. This model can explain large and persistent international differences in output levels and growth rates, caused by small differences in underlying parameters.

People Also Search

• Machine economies - EconPapers
• Machine economies | Electronic Markets - Springer
• (PDF) Machine economies - ResearchGate
• The Rise of the Machines: Automation, Horizontal Innovation, and Income ...
• PDF Machine economies - University of Luxembourg
• Understanding the Machine Economy: Combining Findings from Science and ...
• EconPapers - Internet Public Library
• PDF The Race between Man and Machine: Implications of Technology for Growth ...
• Workers, Machines and Economic Growth - EconPapers
• PDF Machine Economy The New Frontier of Digital Transformation in IoT