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Home arrow Communication arrow How Digital Communication Technology Shapes Markets: Redefining Competition, Building Cooperation
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The Conclusion

We Cooperate to Better Comprehend

Abstract We are in a moment of increasing interdependency because of our connections. Competition in terms of a zero-sum game is simply not an option. There is an acknowledgement, by recognizing our intertwined lives, that cooperating is the individually rational way forward. Since common knowledge is endemic in the network economy - my strategy choices are known almost before I know them - an open conversation about the game, or cooperation, is the best strategy. When the dominant pillars of the network economy are technology and human behavior, and technology has outrun the limits of the law and our ability to grasp its global outcomes, we adapt to fit the environment as we transform it. We cooperate in order to better comprehend.

Keywords Interdependency • Human behavior and law • Red Queen Effect Consensus

In the network economy, connections are the primary mechanism for information sharing which automatically leads to informative prices and transparency. Whereas competition in the traditional model led to informative prices as diverse market participants interacted in a struggle for survival in markets with scarce resources, competition is transparency in a network economy.1 Transparency reveals the benefits of pooling individual information in a cooperative model in order to create common

© The Author(s) 2017 143

S. Bhatt, How Digital Communication Technology Shapes Markets,

Palgrave Advances in the Economics of Innovation and Technology,

DOI 10.1007/978-3-319-47250-8_9

resources. Competition is not a static survival game, but rather a dynamic, ongoing adaptation to the new technology. The question posed in Chapter 1 - does the Internet move markets toward more competition or more cooperation - is best answered by recognizing this view of competition. Connectivity drives cooperative information gathering and sharing which then leads to granularity.

Bargaining is a form of cooperation. While there is a large literature focusing on bargaining in a zero-sum game, I suggest that in a network economy, cooperative bargaining is the rational outcome. Dixit and Skeath show that

negotiations between buyers and sellers proceed to secure mutually advantageous trades. [Furthermore,] coalitions can get together to work out tentative deals as the individual people and groups continue the search for better alternatives. The process of deal making stops only when no person or coalition can negotiate anything better for itself [125].

We are in a moment of increasing interdependency because of our connections. Competition in terms of a zero-sum game is simply not an option. There is an acknowledgement, by recognizing our intertwined lives, that forming coalitions on a cooperative basis is the individually rational way. Common knowledge is endemic in the network economy - my strategy choices are known almost before I know them, so an open conversation about the game, or cooperation, is the best strategy. Human behavior and technology mutually adapt and reinforce each other in a dynamic interaction. Embedded in the Internet are implicit values that have bearing on US constitutional values of privacy, free speech and equal access. So, for example, algorithmic data collection, which creates personal stories by connecting the dots of information, could threaten commonly held notions of privacy. Economic agents who undertake these actions are embodying some social norms about privacy and free speech. Digital technology itself alter these values and norms, so we need to monitor these norms to ensure integrity of the First and Fourth Amendments. We need to create the requisite institutions. Consequently, cooperation is the only strategy amicable with technological capabilities and the law.

The three pillars of the network economy have become, effectively, technology, human behavior and the law. All three are in an inextricable dance of reinforcement and change, but the first pillar, technology, is the most rapidly evolving. Law is not only sluggish, but also reactive rather than proactive so it is never the first mover. The dominance of technology creates an imperative for adapting human behavior to a model of cooperation. We cooperate and share, not out of altruism but rather because it is the only strategy that is preferred in terms of individual goals and objectives.

Lessig writes,

We believe that there are collective values that ought to regulate private action. (“Collective” just in the sense that all individuals acting alone will produce less of that value than if that individual action could be coordinated.) We are also committed to the idea that collective values should regulate the emerging technical world [18].

Cyberspace is beyond any particular jurisdiction, and there is a “shared community of interests that reaches beyond diplomatic ties into the hearts of ordinary citizens” [18].

 
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