Professors James D. Long and Victor Menaldo discuss the recent algorithmic craziness:
Small groups of committed enthusiasts are using the power of social media and its algorithms to make their otherwise quixotic and bizarre ideas go mainstream. These movements have become more commonplace and their velocity has increased. The most recent case is Reddit’s WallStreetBets group of merry men and women driving GameStop’s share piece to the stratosphere in a bid to squeeze hedge funds out of short-selling positions. While the first set of folks who pumped up the stock did so without algorithmic complicity, the buying frenzy quickly spread beyond their circle thanks to AI selecting and recommending stories, news, and testimonials that glamorized the populist campaign.
Legal experts, lawmakers, everyday citizens, and big tech companies can all play a role in improving online discourse. But whatever ultimately happens with the regulation of algorithmic amplification or any other attempt by the government to influence the tech platforms’ business models and behavior, it is imperative to use a systematic approach rooted in the political economy study of externalities.