AI Governance through Markets

• URL: http://arxiv.org/abs/2501.17755v1
• Date: Wed, 29 Jan 2025 16:48:13 GMT
• Title: AI Governance through Markets
• Authors: Philip Moreira Tomei, Rupal Jain, Matija Franklin,
• Abstract summary: We argue that market-based mechanisms offer effective incentives for responsible AI development. We examine four emerging vectors of market governance: insurance, auditing, procurement, and due diligence. This paper urges regulators, economists, and machine learning researchers to investigate and implement market-based approaches to AI governance.
• Score: 6.136487946258519
• License:
• Abstract: This paper argues that market governance mechanisms should be considered a key approach in the governance of artificial intelligence (AI), alongside traditional regulatory frameworks. While current governance approaches have predominantly focused on regulation, we contend that market-based mechanisms offer effective incentives for responsible AI development. We examine four emerging vectors of market governance: insurance, auditing, procurement, and due diligence, demonstrating how these mechanisms can affirm the relationship between AI risk and financial risk while addressing capital allocation inefficiencies. While we do not claim that market forces alone can adequately protect societal interests, we maintain that standardised AI disclosures and market mechanisms can create powerful incentives for safe and responsible AI development. This paper urges regulators, economists, and machine learning researchers to investigate and implement market-based approaches to AI governance.

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