Design choices: Mechanism design and platform capitalism

Mechanism design is a form of optimization developed in economic theory. It casts economists as institutional engineers, choosing an outcome and then arranging a set of market rules and conditions to achieve it. The toolkit from mechanism design is widely used in economics, policymaking, and now in building and managing online environments. Mechanism design has become one of the most pervasive yet inconspicuous influences on the digital mediation of social life. Its optimizing schemes structure online advertising markets and other multi-sided platform businesses. Whatever normative rationales mechanism design might draw on in its economic origins, as its influence has grown and its applications have become more computational, we suggest those justifications for using mechanism design to orchestrate and optimize human interaction are losing traction. In this article, we ask what ideological work mechanism design is doing in economics, computer science, and its applications to the governance of digital platforms. Observing mechanism design in action in algorithmic environments, we argue it has become a tool for producing information domination, distributing social costs in ways that benefit designers, and controlling and coordinating participants in multi-sided platforms.

[1]  Sarah Myers West,et al.  Data Capitalism: Redefining the Logics of Surveillance and Privacy , 2019 .

[2]  Peter V. Mini.  Rational Economic Man: A Philosophical Critique of Neo-Classical Economics , 1977 .

[3]  A. Leyshon,et al.  Platform capitalism: the intermediation and capitalization of digital economic circulation , 2017 .

[4]  Ryan Calo.  Digital Market Manipulation , 2013 .

[5]  Michelle Rodino-Colocino.  Communication Activism| Critical-Cultural Communication Activism Research Calls for Academic Solidarity , 2016 .

[6]  E. Sent.  Rationality and bounded rationality: you can’t have one without the other , 2018, The European Journal of the History of Economic Thought.

[7]  Karen Yeung,et al.  ‘Hypernudge’: Big Data as a mode of regulation by design , 2016, The Social Power of Algorithms.

[8]  Dina Srinivasan.  Why Google Dominates Advertising Markets , 2019 .

[9]  Vahab S. Mirrokni,et al.  Optimizing Display Advertising Markets: Challenges and Directions , 2015, IEEE Internet Computing.

[10]  Michael P. Wellman,et al.  Economic reasoning and artificial intelligence , 2015, Science.

[11]  A. Sen,et al.  The Possibility of Social Choice , 1999 .

[12]  J. Harsanyi.  Games with Incomplete Information Played by “Bayesian” Players Part II. Bayesian Equilibrium Points , 1968 .

[13]  L. Hurwicz.  The Design of Mechanisms for Resource Allocation , 1973 .

[14]  Aaron Shapiro,et al.  Between autonomy and control: Strategies of arbitrage in the “on-demand” economy , 2018, New Media Soc..

[15]  E. H. Clarke.  Multipart pricing of public goods , 1971 .

[16]  Roger B. Myerson,et al.  Optimal Auction Design , 1981, Math. Oper. Res..

[17]  Joseph Y. Halpern,et al.  2 A Computational Game-Theoretic Framework 2 . 1 Bayesian Games , 2008 .

[18]  Lee McGuigan,et al.  Automating the audience commodity: The unacknowledged ancestry of programmatic advertising , 2019, New Media Soc..

[19]  Amita Chatterjee.  Where Is the Knowledge We Have Lost in Information , 2010 .

[20]  M. Callon,et al.  Peripheral Vision , 2005 .

[21]  Gary Anthes,et al.  Mechanism design meets computer science , 2010, Commun. ACM.

[22]  Ruggiero Cavallo,et al.  GSP: The Cinderella of Mechanism Design , 2017, WWW.

[23]  Eric Maskin,et al.  Mechanism Design: How to Implement Social Goals , 2008 .

[24]  Helen Nissenbaum,et al.  Technology, Autonomy, and Manipulation , 2019, Internet Policy Rev..

[25]  H. Varian.  Computer Mediated Transactions , 2010 .

[26]  William Vickrey,et al.  Counterspeculation, Auctions, And Competitive Sealed Tenders , 1961 .

[27]  David B. Nieborg,et al.  The platformization of cultural production: Theorizing the contingent cultural commodity , 2018, New Media Soc..

[28]  Shuchi Chawla,et al.  Mechanism design for data science , 2014, EC.

[29]  Christian Sandvig,et al.  Infrastructure studies meet platform studies in the age of Google and Facebook , 2018, New Media Soc..

[30]  Andrew McStay.  Micro-Moments, Liquidity, Intimacy and Automation: Developments in Programmatic Ad-tech , 2017 .

[31]  J. Tomassetti.  Does Uber Redefine the Firm? The Postindustrial Corporation and Advanced Information Technology , 2016 .

[32]  H. Varian.  Online Ad Auctions , 2009 .

[33]  Alex Rosenblat,et al.  Algorithmic Labor and Information Asymmetries: A Case Study of Uber’s Drivers , 2016 .

[34]  S. Noble.  Algorithms of Oppression: How Search Engines Reinforce Racism , 2018 .

[35]  Tuomas Sandholm,et al.  Automated Mechanism Design: A New Application Area for Search Algorithms , 2003, CP.

[36]  E. Maskin.  Friedrich von Hayek and mechanism design , 2015 .

[37]  Q. Slobodian.  Globalists: The End of Empire and the Birth of Neoliberalism , 2018 .

[38]  Paul Milgrom.  Auction Market Design: Recent Innovations , 2019, Annual Review of Economics.

[39]  Aaron Shapiro.  Dynamic exploits: calculative asymmetries in the on‐demand economy , 2020 .

[40]  Christos H. Papadimitriou,et al.  Algorithms, Games, and the Internet , 2001, ICALP.

[41]  Kira Goldner,et al.  Mechanism design for social good , 2018, SIGAI.

[42]  Éva Tardos,et al.  Introduction to computer science and economic theory , 2015, J. Econ. Theory.

[43]  Jonathan Levin,et al.  Economics in the age of big data , 2014, Science.

[44]  R. Mansell,et al.  Advanced Introduction to Platform Economics , 2020 .

[45]  D. Zwick,et al.  Manipulate to empower: Hyper-relevance and the contradictions of marketing in the age of surveillance capitalism , 2020, Big Data Soc..

[46]  Hal R. Varian,et al.  Economic Mechanism Design for Computerized Agents , 1995, USENIX Workshop on Electronic Commerce.