ted byfield on Mon, 6 Jul 1998 19:13:41 +0200 (MET DST)

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<nettime> a lot of little short busts :|

[So if high-tech capitalism systemically tends to become a low-returns 
 business, what about alternative models, for example high-tech reform-
 ist socialism? anyway. forwarded with permission.-T]


                              Wired for mayhem

                                By Mark Ward
                     Economic booms and busts will become more
                   frequent and more severe if programs called
                  software agents control electronic commerce.
                    Agents tend to exaggerate the worst market
              swings and create disastrous price wars, say two
              research groups in the US.

              As more  goods  and services  are bought  on the
              Internet, observers  predict  that we  will need
              agents to  get the  best prices.  But agents are
              not subject to the restraints that normally slow
              economic activity: their transactions take place
              almost instantaneously, cost next to nothing and
              distance is irrelevant.

              Jeffrey Kephart  and colleagues  at IBM's Thomas
              J. Watson Research Center  in New York have been
              studying a simple market that uses agents to buy
              and  sell information  like  stock  prices. They
              created a model with  three types of agents: one
              published the  information,  another acted  as a
              broker that split the data into saleable chunks,
              and the  third represented  consumers. The model
              used 10  information  providers, 10  brokers and
              1000 customers.

              Yet even  in  this  simple model,  Kephart found
              that the swift reactions  of broker and consumer
              agents to  price changes  meant that devastating
              price  wars  raged  constantly,  and  providers'
              profits  varied   wildly  as   they  fought  for
              business.  Customers   were  often   dropped  by
              brokers when  it  became unprofitable  to supply
              them with information.

              Alexander   Chislenko   of   the   Massachusetts
              Institute of Technology built another model--and
              got   very  similar   results.   He   says  that
              controlling economies  with heavy  use of agents
              "would be like trying  to control a car that was
              travelling at  500 miles an  hour" because agent
              economies exhibit  behaviour that  verges on the


                  Copyright New Scientist, RBI Limited 1998
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