Rise of the Digital Regulator
63 Pages Posted: 23 Jan 2017 Last revised: 22 Oct 2017
Date Written: March 1, 2016
The administrative state is leveraging algorithms to influence individuals’ private decisions. Agencies have begun to write rules to shape for-profit websites such as Expedia and have launched their own online tools such as the Consumer Financial Protection Bureau’s mortgage calculator. These digital intermediaries aim to guide people toward better schools, healthier food, and more savings. But enthusiasm for this regulatory paradigm rests on two questionable assumptions. First, digital intermediaries effectively police consumer markets. Second, they require minimal government involvement. Instead, some for-profit online advisers such as travel websites have become what many mortgage brokers were before the 2008 financial crisis. Although they make buying easier, they can also subtly advance their interests at the expense of those they serve. Publicly run alternatives lack accountability or—like the Affordable Care Act health-insurance exchanges—are massive undertakings. The unpleasant truth is that creating effective digital regulators would require investing heavily in a new oversight regime or sophisticated state machines. Either path would benefit from an interdisciplinary uniform process to modernize administrative, antitrust, commercial, and intellectual property laws. Ideally, a technology meta-agency would then help keep that legal framework updated.
Keywords: Artificial Intelligence, Algorithms, Digital, Data, Consumer Protection, Law, Contracts, Mandatory Disclosures, Regulation, Antitrust, Commercial Law, Intermediaries, Internet, Cyberlaw, CFPB, Fintech, Affordable Care Act, Administrative Law, Privatization, Finance, Contracts, Online, E-Commerce
JEL Classification: K10, K12, K20, K2, K20, K23, K21, K4, K40, K41, L13, L14, L1, L10, L21, L22, L24, L41, L43, L51, L53
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