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Do Algorithms Facilitate Coordination?
Michal S. Gal
University of Haifa Faculty of Law
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1. Agreement
2. Detection
3. Sanction
4. High entry barriers
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:Agreement
Speedier calculation
Sophisticated calculation
Rational decision
Known recipe
Strong signal
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:Detection Monitor
Distinguish
Sanction: React immediately
Calculate risk Credible threat
High entry barriers must exist
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“Digital Shadow” Stronger incentives But more difficult
Market sharing
Data sharing
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Market Solutions? Algorithmic Consumers
"I never think of the future. It comes
soon enough..." Albert Einstein
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offer more information
Identify the need
execute the transaction
game changer
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Lower costs
Speedier decision
More sophisticated
Less decisional energy
Lower consumer biases
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Downsides?
Cyber harms Wrong preferences
Reduction in autonomy Psychological effects
Social effects Exercising our decision muscle
Knowing our world Privacy
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Anti-discrimination
Anti-collusion
Anti-concentration
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Algorithmic Buyer Power Access to Users Access to Data
Domination by the big 5
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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.
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Agreement?
Simple scenario
“explicit agreement”?
Tacit Collusion
Facilitating Practices
Parallel adoption?
No justification?
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Which conduct to prohibit?
Chilling effect
Areeda test
Develop red flags
Deep learning?
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Widening the net
how much transparency?
Explainability?
Playing catch up...