Vision of the future
Today, we are witnessing the first steps in the evolution of the Internet towards an open, free-market information economy of software agents buying and selling a rich variety of information goods and services. We envision the Internet some years hence as a seething milieu in which billions of economically-motivated software agents find and process information and disseminate it to humans and, increasingly, to other agents. Agents will naturally evolve from facilitators into decision-makers, and their degree of autonomy and responsibility will continue to increase with time. Ultimately, transactions among economic software agents will constitute an essential and perhaps even dominant portion of the world economy.

The evolution of the Internet into an information economy seems as desirable as it does inevitable. After all, economic mechanisms are arguably the best known way to adjudicate and satisfy the conflicting needs of billions of agents – human agents. It is tempting to blindly wave the Invisible Hand and assume that the same mechanisms can be applied successfully to software agents. However, automated agents are not people! They make decisions and act on them at a vastly greater speed. They are immeasurably less sophisticated, less flexible, less able to learn, and notoriously lacking in "common sense". Given these differences, it is entirely possible that agent-based economies will behave in very strange and unfamiliar ways.

Research agenda
In order to anticipate and influence how large-scale information economies are likely to behave, we take a two-pronged approach. First, we use analysis and simulation to study the collective behavior of models of large populations of software agents employing a variety of economic protocols and adaptive utility-maximization algorithms. Some of our research papers have concentrated on a simple model of an information filtering economy, such as might be embedded in a larger information economy. The model is inspired by information dissemination services that can be found on the Internet today, and sets them in an economic context. In particular, we have focussed on issues of market efficiency, spontaneous niche specialization, and cyclical price wars that may threaten the viability of low-friction economies. The work on price wars has received some media attention. We have also studied models dealing with shopbots and their likely impact on markets, information bundling by software agents, and multi-agent learning in an economic context.

Second, we are developing a software platform that supports the interaction of tens of thousands of economically-motivated software agents, and provides common economic componentry such as pricing algorithms and negotiation protocols (developed using insights gained from the more theoretical studies). A first prototype of an information economy called BookMarket is being built on top of this platform. In BookMarket, agents buy and sell a variety of information goods and services that revolve around the sale of books, including various matchmaking and brokering services and the provision of information about prices and reputations. To the greatest extent possible, the agents are based on services already available on the Internet.

The Information Economies project is supported by the IBM Institute for Advanced Commerce. A popular account of some of our work is given in an article in IBM Research Magazine.

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