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Markets, Market Algorithms, and Algorithmic Bias

van Basshuysen, Philippe (2022) Markets, Market Algorithms, and Algorithmic Bias. Journal of Economic Methodology. ISSN 1350-178X

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Abstract

Where economists previously viewed the market as arising from a ‘spontaneous order’, antithetical to design, they now design markets to achieve specific purposes. This paper reconstructs how this change in what markets are and can do came about and considers some consequences. Two decisive developments in economic theory are identified: first, Hurwicz’s view of institutions as mechanisms, which should be designed to align incentives with social goals; and second, the notion of marketplaces – consisting of infrastructure and algorithms – which should be designed to exhibit stable properties. These developments have empowered economists to create marketplaces for specific purposes, by designing appropriate algorithms. I argue that this power to create marketplaces requires a shift in ethical reasoning, from whether markets should reach into certain spheres of life, to how market algorithms should be designed. I exemplify this shift, focusing on bias, and arguing that transparency should become a goal of market design.


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Item Type: Published Article or Volume
Creators:
CreatorsEmailORCID
van Basshuysen, Philippep.c.van-basshuysen@lse.ac.uk0000-0003-1947-9309
Keywords: Markets algorithms market design bias transparency
Subjects: Specific Sciences > Economics
General Issues > Ethical Issues
General Issues > Game Theory
General Issues > History of Science Case Studies
General Issues > Science and Society
General Issues > Science and Policy
General Issues > Values In Science
Depositing User: Mr. Philippe van Basshuysen
Date Deposited: 08 Aug 2022 18:28
Last Modified: 08 Aug 2022 18:28
Item ID: 21028
Journal or Publication Title: Journal of Economic Methodology
Official URL: https://doi.org/10.1080/1350178X.2022.2100919
DOI or Unique Handle: 10.1080/1350178X.2022.2100919
Subjects: Specific Sciences > Economics
General Issues > Ethical Issues
General Issues > Game Theory
General Issues > History of Science Case Studies
General Issues > Science and Society
General Issues > Science and Policy
General Issues > Values In Science
Date: 2022
ISSN: 1350-178X
URI: http://philsci-archive.pitt.edu/id/eprint/21028

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