168
8 How Society Works
we have learned that punishment isn’t the best mechanism to stabilize cooperation.
In multi-cultural settings, it rather tends to create conflict, i.e. the breakdown of
social order. But most of the time a suitable coordination mechanism is sufficient
to stabilize cooperation. In the past, such coordination mechanisms haven’t always
been available to everyone, but information systems can now change this. Altruistic
signaling, reputation systems and merit-based matching are three promising new
ways to foster cooperation, which are based on information systems rather than
punishment. However, we could build much more sophisticated digital assistants to
create social order and further benefits.
As we have seen before, many problems occur when people or companies don’t
care about the external effects of their decisions and actions on others (i.e. socalled “externalities”). As “tragedies of the commons” or wars demonstrate, this
can be harmful for everyone. So, how can we encourage more responsible behavior
and create sustainable systems? The classical approach would be to devise, implement and enforce new legal regulations. But people don’t like to be ruled, and our
labyrinthine legal systems already leads to confusion, inefficiency, loopholes, and
high costs. As a consequence, laws are often ineffective. However, Social Technologies offer a new opportunity to create a better world, by supporting favorable local
interactions and self-organization. It’s actually easier than you might think, and it’s
completely different from nudging, which tricks people.
8.18 Digital Assistants
When two people or companies interact, there are just four possible outcomes, which
relate to coordination failures and conflicts of interest. The first possibility is that
of a lose-lose situation. In such cases, it is best to avoid the interaction altogether.
For this, we need information technologies that make us aware of expected negative
side effects associated with an interaction: if we know the social and environmental
implications of our interactions, we can make better decisions. Therefore, measuring
the externalities of our actions is important in order to avoid unforeseen damage. In
fact, if we had to pay for negative externalities of our decisions and actions and if
we would earn on positive externalities, this would help us to reduce the divergence
between private and collective interests. As a result, self-interested decisions of individuals and companies would be less likely to cause economic or environmental
damage.
The second possibility is a bad win-lose situation. In such cases, one party is
interested in the interaction, but the other side would like to avoid it, and the overall
effect would be negative. In such situations, increasing awareness may help, but
social mechanisms to protect people (or firms) from exploitation are necessary, too.
I will address this in detail in Appendix 7.2.
The third possibility is a good win-lose situation. While the interaction would
benefit one party at the expense of another, there would be an overall systemic benefit
from the interaction nevertheless. Obviously, in this scenario one party would like to
8 How Society Works
we have learned that punishment isn’t the best mechanism to stabilize cooperation.
In multi-cultural settings, it rather tends to create conflict, i.e. the breakdown of
social order. But most of the time a suitable coordination mechanism is sufficient
to stabilize cooperation. In the past, such coordination mechanisms haven’t always
been available to everyone, but information systems can now change this. Altruistic
signaling, reputation systems and merit-based matching are three promising new
ways to foster cooperation, which are based on information systems rather than
punishment. However, we could build much more sophisticated digital assistants to
create social order and further benefits.
As we have seen before, many problems occur when people or companies don’t
care about the external effects of their decisions and actions on others (i.e. socalled “externalities”). As “tragedies of the commons” or wars demonstrate, this
can be harmful for everyone. So, how can we encourage more responsible behavior
and create sustainable systems? The classical approach would be to devise, implement and enforce new legal regulations. But people don’t like to be ruled, and our
labyrinthine legal systems already leads to confusion, inefficiency, loopholes, and
high costs. As a consequence, laws are often ineffective. However, Social Technologies offer a new opportunity to create a better world, by supporting favorable local
interactions and self-organization. It’s actually easier than you might think, and it’s
completely different from nudging, which tricks people.
8.18 Digital Assistants
When two people or companies interact, there are just four possible outcomes, which
relate to coordination failures and conflicts of interest. The first possibility is that
of a lose-lose situation. In such cases, it is best to avoid the interaction altogether.
For this, we need information technologies that make us aware of expected negative
side effects associated with an interaction: if we know the social and environmental
implications of our interactions, we can make better decisions. Therefore, measuring
the externalities of our actions is important in order to avoid unforeseen damage. In
fact, if we had to pay for negative externalities of our decisions and actions and if
we would earn on positive externalities, this would help us to reduce the divergence
between private and collective interests. As a result, self-interested decisions of individuals and companies would be less likely to cause economic or environmental
damage.
The second possibility is a bad win-lose situation. In such cases, one party is
interested in the interaction, but the other side would like to avoid it, and the overall
effect would be negative. In such situations, increasing awareness may help, but
social mechanisms to protect people (or firms) from exploitation are necessary, too.
I will address this in detail in Appendix 7.2.
The third possibility is a good win-lose situation. While the interaction would
benefit one party at the expense of another, there would be an overall systemic benefit
from the interaction nevertheless. Obviously, in this scenario one party would like to