Rise of the digital regulator

Rise of the digital regulator

By Rory Van Loo (Boston University)

Abstract:     The administrative state is extending its reach through machines designed to influence decisions. Agencies have written rules to strengthen travel websites such as Expedia and have launched their own online tools such as the Consumer Financial Protection Bureau’s mortgage calculator. These tools steer people toward better schools, healthier food, and more savings. Enthusiasm for these choice engines rests on two questionable assumptions. First, they effectively police consumer markets. Second, they require minimal government involvement. In diverse contexts, for-profit online advisers such as travel websites have become what mortgage brokers often were before the 2008 financial crisis. They make buying easier. But they also subtly advance their interests at the expense of those they serve. Publicly run alternatives perform unpredictably or — like the Affordable Care Act health-insurance exchanges — are massive undertakings. Any narrative of mandated machine-readable disclosures effortlessly launching powerful consumer sentinels is fiction. The unpleasant truth is that effective digital regulators would require investing heavily in either artificially intelligent state machines or a new legal regime.

Continue reading…