Abstract
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.
Highlights
Digital platforms have become infrastructures for organizing an increasing range of social, economic, and cultural activities (Caplan and Boyd, 2018; Nieborg and Poell, 2018; Plantin et al, 2018; Srnicek, 2017)
Mechanism design is a form of optimization developed in economic theory
We show how mechanism design participates in the contradictory process of automating away markets (Birch, 2020), by diminishing cognitive assumptions about agents, and moving information processing deeper into the algorithmic elements of the person-machine systems that constitute automated mechanisms
Summary
Digital platforms have become infrastructures for organizing an increasing range of social, economic, and cultural activities (Caplan and Boyd, 2018; Nieborg and Poell, 2018; Plantin et al, 2018; Srnicek, 2017). Through automated and algorithmic tools and methods, companies like Google, Facebook, Amazon, and Uber exercise a special capacity for managing their customers, competitors, and workers (Darmody and Zwick, 2020; Shapiro, 2020; Yeung, 2017) They command many sources of leverage, including the monopoly power permitted under moribund antitrust enforcement (Khan, 2017; Srinivasan, 2020), regulatory blackholes that relieve them of social responsibilities (Rosenblat and Stark, 2016; Shapiro, 2018), and informational advantages owing to their position between buyers and sellers (Mansell and Steinmueller, 2020). Computational adaptations of mechanism design (and related management sciences, such as operations research) have become a major force in governing online environments and platforms This so-called algorithmic or automated mechanism design (AMD) is one of the most pervasive yet inconspicuous influences on the digital mediation of social life. Our critique of mechanism design makes interventions in two directions: it gives critical researchers new insights into the discipline behind certain pathologies of platform capitalism; and it asks mechanism designers to look critically at the contradictions and pathologies within the discipline itself
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