Essays on Economics of Internet Personalization

The first essay of this doctoral dissertation empirically measures the business value of personalization using data consisting of 600,000 email advertisements with varying degrees of personalization sent to 35,000 customers over a nine month period. While we confirm that personalization based on customers past interests generates a positive response, we also report evidence that customers are concerned about privacy and respond negatively when the firm sends them advertisements with personalized greetings. We also use a finite mixture model to account for consumer specific heterogeneity in our data and identify segments of consumers with different response to personalization. The second essay uses a game-theoretic model to analyze the economics of personalization and information sharing in a duopoly where firms are asymmetric in the amount of information that they possess. We show that sharing consumer information leads to an increase in the firm profits but a decrease in consumer surplus. We also show that information sharing is possible even if each consumer controls her information and decides whether the firm should share it or not with other firms. Under different conditions, information ownership by consumers poses a credible threat and deters firms from sharing information or a non-credible threat, when consumers allow their information to be shared even if they are worse off after information sharing. Finally, the presence of privacy-conscious consumers leads to a redistribution of surplus from firms to consumers but can lead to a decrease in social welfare

New Economic Analysis of Law: Beyond Technocracy and Market Design

This special issue on New Economic Analysis of Law features illuminating syntheses of social science and law. What would law and economics look like if macroeconomics were a concern of scholars now focused entirely on microeconomics? Do emerging online phenomena, such as algorithmic pricing and platform capitalism, promise to perfect economic theories of market equilibrium, or challenge their foundations? How did simplified economic models gain ideological power in policy circles, and how can they be improved or replaced? This issue highlights scholars whose work has made the legal academy more than an “importer” of ideas from other disciplines—and who have, instead, shown that rigorous legal analysis is fundamental to understanding economic affairs.The essays in this issue should help ensure that policymakers’ turn to new economic thinking promotes inclusive prosperity. Listokin, Bayern, and Kwak have identified major aporias in popular applications of law and economics methods. Ranchordás, Stucke, and Ezrachi have demonstrated that technological fixes, ranging from digital ranking and rating systems to artificial intelligence-driven personal assistants, are unlikely to improve matters unless they are wisely regulated. McCluskey and Rahman offer a blueprint for democratic regulation, which shapes the economy in productive ways and alleviates structural inequalities. Taken as a whole, this issue of Critical Analysis of Law shows that legal thinkers are not merely importers of ideas and models from economics, but also active participants, with a great deal to contribute to social science research

Algorithms, Automation, and News

This special issue examines the growing importance of algorithms and automation in the gathering, composition, and distribution of news. It connects a long line of research on journalism and computation with scholarly and professional terrain yet to be explored. Taken as a whole, these articles share some of the noble ambitions of the pioneering publications on ‘reporting algorithms’, such as a desire to see computing help journalists in their watchdog role by holding power to account. However, they also go further, firstly by addressing the fuller range of technologies that computational journalism now consists of: from chatbots and recommender systems, to artificial intelligence and atomised journalism. Secondly, they advance the literature by demonstrating the increased variety of uses for these technologies, including engaging underserved audiences, selling subscriptions, and recombining and re-using content. Thirdly, they problematize computational journalism by, for example, pointing out some of the challenges inherent in applying AI to investigative journalism and in trying to preserve public service values. Fourthly, they offer suggestions for future research and practice, including by presenting a framework for developing democratic news recommenders and another that may help us think about computational journalism in a more integrated, structured manner

Platform Advocacy and the Threat to Deliberative Democracy

Businesses have long tried to influence political outcomes, but today, there is a new and potent form of corporate political power—Platform Advocacy. Internet-based platforms, such as Facebook, Google, and Uber, mobilize their user bases through direct solicitation of support and the more troubling exploitation of irrational behavior. Platform Advocacy helps platforms push policy agendas that create favorable legal environments for themselves, thereby strengthening their own dominance in the marketplace. This new form of advocacy will have radical effects on deliberative democracy. In the age of constant digital noise and uncertainty, it is more important than ever to detect and analyze new forms of political power. This Article will contribute to our understanding of one such new form and provide a way forward to ensure the exceptional power of platforms do not improperly influence consumers and, by extension, lawmakers

Platforms, the First Amendment and Online Speech: Regulating the Filters

In recent years, online platforms have given rise to multiple discussions about what their role is, what their role should be, and whether they should be regulated. The complex nature of these private entities makes it very challenging to place them in a single descriptive category with existing rules. In today’s information environment, social media platforms have become a platform press by providing hosting as well as navigation and delivery of public expression, much of which is done through machine learning algorithms. This article argues that there is a subset of algorithms that social media platforms use to filter public expression, which can be regulated without constitutional objections. A distinction is drawn between algorithms that curate speech for hosting purposes and those that curate for navigation purposes, and it is argued that content navigation algorithms, because of their function, deserve separate constitutional treatment. By analyzing the platforms’ functions independently from one another, this paper constructs a doctrinal and normative framework that can be used to navigate some of the complexity. The First Amendment makes it problematic to interfere with how platforms decide what to host because algorithms that implement content moderation policies perform functions analogous to an editorial role when deciding whether content should be censored or allowed on the platform. Content navigation algorithms, on the other hand, do not face the same doctrinal challenges; they operate outside of the public discourse as mere information conduits and are thus not subject to core First Amendment doctrine. Their function is to facilitate the flow of information to an audience, which in turn participates in public discourse; if they have any constitutional status, it is derived from the value they provide to their audience as a delivery mechanism of information. This article asserts that we should regulate content navigation algorithms to an extent. They undermine the notion of autonomous choice in the selection and consumption of content, and their role in today’s information environment is not aligned with a functioning marketplace of ideas and the prerequisites for citizens in a democratic society to perform their civic duties. The paper concludes that any regulation directed to content navigation algorithms should be subject to a lower standard of scrutiny, similar to the standard for commercial speech

[How] Can Pluralist Approaches to Computational Cognitive Modeling of Human Needs and Values Save our Democracies?

In our increasingly digital societies, many companies have business models that perceive users’ (or customers’) personal data as a siloed resource, owned and controlled by the data controller rather than the data subjects. Collecting and processing such a massive amount of personal data could have many negative technical, social and economic consequences, including invading people’s privacy and autonomy. As a result, regulations such as the European General Data Protection Regulation (GDPR) have tried to take steps towards a better implementation of the right to digital privacy. This paper proposes that such legal acts should be accompanied by the development of complementary technical solutions such as Cognitive Personal Assistant Systems to support people to effectively manage their personal data processing on the Internet. Considering the importance and sensitivity of personal data processing, such assistant systems should not only consider their owner’s needs and values, but also be transparent, accountable and controllable. Pluralist approaches in computational cognitive modelling of human needs and values which are not bound to traditional paradigmatic borders such as cognitivism, connectionism, or enactivism, we argue, can create a balance between practicality and usefulness, on the one hand, and transparency, accountability, and controllability, on the other, while supporting and empowering humans in the digital world. Considering the threat to digital privacy as significant to contemporary democracies, the future implementation of such pluralist models could contribute to power-balance, fairness and inclusion in our societies

Configuring the Networked Citizen

Among legal scholars of technology, it has become commonplace to acknowledge that the design of networked information technologies has regulatory effects. For the most part, that discussion has been structured by the taxonomy developed by Lawrence Lessig, which classifies code as one of four principal regulatory modalities, alongside law, markets, and norms. As a result of that framing, questions about the applicability of constitutional protections to technical decisions have taken center stage in legal and policy debates. Some scholars have pondered whether digital architectures unacceptably constrain fundamental liberties, and what public design obligations might follow from such a conclusion. Others have argued that code belongs firmly on the private side of the public/private divide because it originates in the innovative activity of private actors. In a forthcoming book, the author argues that the project of situating code within one or another part of the familiar constitutional landscape too often distracts legal scholars from more important questions about the quality of the regulation that networked digital architectures produce. The gradual, inexorable embedding of networked information technologies has the potential to alter, in largely invisible ways, the interrelated processes of subject formation and culture formation. Within legal scholarship, the prevailing conceptions of subjectivity tend to be highly individualistic, oriented around the activities of speech and voluntary affiliation. Subjectivity also tends to be understood as definitionally independent of culture. Yet subjectivity is importantly collective, formed by the substrate within which individuality emerges. People form their conceptions of the good in part by reading, listening, and watching—by engaging with the products of a common culture—and by interacting with one another. Those activities are socially and culturally mediated, shaped by the preexisting communities into which individuals are born and within which they develop. They are also technically mediated, shaped by the artifacts that individuals encounter in common use. The social and cultural patterns that mediate the activities of self-constitution are being reconfigured by the pervasive adoption of technical protocols and services that manage the activities of content delivery, search, and social interaction. In developed countries, a broad cross-section of the population routinely uses networked information technologies and communications devices in hundreds of mundane, unremarkable ways. We search for information, communicate with each other, and gain access to networked resources and services. For the most part, as long as our devices and technologies work as expected, we give little thought to how they work; those questions are understood to be technical questions. Such questions are better characterized as sociotechnical. As networked digital architectures increasingly mediate the ordinary processes of everyday life, they catalyze gradual yet fundamental social and cultural change. This chapter—originally published in Imagining New Legalities: Privacy and Its Possibilities in the 21st Century, edited by Austin Sarat, Lawrence Douglas, and Martha Merrill Umphrey (2012)—considers two interrelated questions that flow from understanding sociotechnical change as (re)configuring networked subjects. First, it revisits the way that legal and policy debates locate networked information technologies with respect to the public/private divide. The design of networked information technologies and communications devices is conventionally treated as a private matter; indeed, that designation has been the principal stumbling block encountered by constitutional theorists of technology. The classification of code as presumptively private has effects that reach beyond debates about the scope of constitutional guarantees, shaping views about the extent to which regulation of technical design decisions is normatively desirable. This chapter reexamines that discursive process, using lenses supplied by literatures on third-party liability and governance. Second, this chapter considers the relationship between sociotechnical change and understandings of citizenship. The ways that people think, form beliefs, and interact with one another are centrally relevant to the sorts of citizens that they become. The gradual embedding of networked information technologies into the practice of everyday life therefore has important implications for both the meaning and the practice of citizenship in the emerging networked information society. If design decisions are neither merely technical nor presumptively private, then they should be subject to more careful scrutiny with regard to the kind of citizen they produce. In particular, policy-makers cannot avoid engaging with the particular values that are encoded

Shifting from Individualism to Genericism: Personalization as a Conspiracy Theory

With severe mistrust around classical approaches to consciousness, this paper claims that arguments around the notion of “personalization” of media or messages are grounded on a misinterpretation. Based on the two presuppositions of respective differentiation of human beings and the power to make choices based on reasoning, these approaches have been the reference for many well-known scientific studies, mainly in the fields of media studies, economics, political sciences, and psychology. Despite refuting their results via meta-analyses, such theories have so far sought to maintain their position by resorting to conspiracy theories, the promotion of which, ironically, leads to the syndrome of skepticism, which supports its origins in a vicious circle. While these approaches have been ubiquitous in so-called cognitive priming, projection of mass movements and political abuses of the concepts such as misinformation or disinformation, the mainstream workouts in the fields including but not limited to Perception Management, Artificial Intelligence, and Machine Learning have significantly relied on both de-individualistic and irrational processes. This article aims to prove that the ontological claims about the centrality of individualism in the latest fields of all media and communication technological procedures are grounded in a conspiracy theory. Relying on the method of epistemological reasoning, this article attempts to prove that individualism and personalization in the field of the media industry are the principal tools of social control through the spread of skepticism, which takes advantage of the fictitious nature of the new media sphere for commercial and political purposes

No Consumer Is an Island—Relational Disclosure as a Regulatory Strategy to Advance Consumer Protection Against Microtargeting

Presently, most business-to-consumer interaction uses consumer profiling to elaborate and deliver personalized products and services. It has been observed that these practices can be welfare-enhancing if properly regulated. At the same time, risks related to their abuses are present and significant, and it is no surprise that in recent times, personalization has found itself at the centre of the scholarly and regulatory debate. Within currently existing and forthcoming regulations, a common perspective can be found: given the capacity of microtargeting to potentially undermine consumers’ autonomy, the success of the regulatory intervention depends primarily on people being aware of the personality dimension being targeted. Yet, existing disclosures are based on an individualized format, focusing solely on the relationship between the professional operator and its counterparty; this approach operates in contrast to sociological studies that consider interaction and observation of peers to be essential components of decision making. A consideration of this “relational dimension” of decision making is missing both in consumer protection and in the debate on personalization. This article defends that consumers’ awareness and understanding of personalization and its consequences could be improved significantly if information was to be offered according to a relational format; accordingly, it reports the results of a study conducted in the streaming service market, showing that when information is presented in a relational format, people’s knowledge and awareness about profiling and microtargeting are significantly increased. The article further claims the potential of relational disclosure as a general paradigm for advancing consumer protection