{"id":2251,"date":"2025-06-06T01:25:30","date_gmt":"2025-06-06T01:25:30","guid":{"rendered":"https:\/\/europaskolos.lt\/index.php\/2025\/06\/06\/at-the-money-algorithmic-harm\/"},"modified":"2025-06-06T01:25:30","modified_gmt":"2025-06-06T01:25:30","slug":"at-the-money-algorithmic-harm","status":"publish","type":"post","link":"https:\/\/europaskolos.lt\/index.php\/2025\/06\/06\/at-the-money-algorithmic-harm\/","title":{"rendered":"At The Money: Algorithmic Harm"},"content":{"rendered":"<p><\/p>\n<div>\n<p><iframe style=\"border-radius: 12px;\" data-lazy-type=\"iframe\" data-src=\"https:\/\/open.spotify.com\/embed\/episode\/3fvAZ4vsa9kkAh0qzu4ubH?utm_source=generator\" width=\"100%\" height=\"352\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"lazy lazy-hidden mce_SELRES_start\">\ufeff<\/span><\/iframe><\/p>\n<p><noscript><iframe loading=\"lazy\" style=\"border-radius: 12px;\" src=\"https:\/\/open.spotify.com\/embed\/episode\/3fvAZ4vsa9kkAh0qzu4ubH?utm_source=generator\" width=\"100%\" height=\"352\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><span data-mce-type=\"bookmark\" style=\"display: inline-block; width: 0px; overflow: hidden; line-height: 0;\" class=\"mce_SELRES_start\">\ufeff<\/span><\/iframe><\/noscript><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>At The Money: Algorithmic Harm with Professor Cass Sunstein, Harvard Law<\/p>\n<p>What is the impact of \u201c\u200aAlgorithms\u201d on the prices you pay for your Uber, what gets fed to you on TikTok, even the prices you pay in the supermarket?<\/p>\n<p>Full transcript below.<\/p>\n<p style=\"text-align: center;\">~~~<\/p>\n<p>About this week\u2019s guest:<\/p>\n<p>Cass Sunstein, professor at Harvard Law School co-author of the new book, \u201c<em>Algorithmic Harm: Protecting People in the Age of Artificial Intelligence<\/em>\u201d Previously he co-authored \u201cNudge\u201d with Nobel Laureate Dick Thaler. We discuss whether all this algorithmic impact is helping or harming people.<\/p>\n<p>For more info, see:<\/p>\n<blockquote>\n<p>Professional\/Personal website<\/p>\n<p>Masters in Business<\/p>\n<p>LinkedIn<\/p>\n<p>Twitter<\/p>\n<\/blockquote>\n<p style=\"text-align: center;\">~~~<\/p>\n<p>Find all of the previous\u00a0<em>At the Money<\/em>\u00a0episodes here, and in the MiB feed on\u00a0Apple Podcasts,\u00a0YouTube,\u00a0Spotify, and\u00a0Bloomberg.<\/p>\n<p>And find the entire musical playlist of all the songs I have used on <em>At the Money on Spotify<\/em><\/p>\n<p>\u00a0<\/p>\n<p><iframe class=\"lazy lazy-hidden\" style=\"width: 100%; max-width: 660px; overflow: hidden; border-radius: 10px;\" data-lazy-type=\"iframe\" data-src=\"https:\/\/embed.podcasts.apple.com\/us\/podcast\/at-the-money-algorithmic-harm-with-professor-cass-sunstein\/id730188152?i=1000711220505\" height=\"175\" frameborder=\"0\" sandbox=\"allow-forms allow-popups allow-same-origin allow-scripts allow-storage-access-by-user-activation allow-top-navigation-by-user-activation\"><\/iframe><\/p>\n<p><noscript><iframe style=\"width: 100%; max-width: 660px; overflow: hidden; border-radius: 10px;\" src=\"https:\/\/embed.podcasts.apple.com\/us\/podcast\/at-the-money-algorithmic-harm-with-professor-cass-sunstein\/id730188152?i=1000711220505\" height=\"175\" frameborder=\"0\" sandbox=\"allow-forms allow-popups allow-same-origin allow-scripts allow-storage-access-by-user-activation allow-top-navigation-by-user-activation\"><\/iframe><\/noscript><\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p><em>Transcript<\/em>:<\/p>\n<p><strong>Barry Ritholtz<\/strong>: \u200aAlgorithms are everywhere. They determine the price you pay for your Uber; what gets fed to you on TikTok and Instagram, and even the prices you pay in the supermarket. Is all of this <em>algorithmic impact<\/em> helping or harming people?<\/p>\n<p>To answer that question, let\u2019s bring in Cass Sunstein. He is the author of a new book, \u201cAlgorithmic Harm: Protecting People in the Age of Artificial Intelligence\u201d (co-written with Orrin Bargil). Cass is a professor at Harvard Law School and is perhaps best known for his books on Star Wars, and co-authoring \u201cNudge\u201d with Nobel Laureate Dick Thaler.<\/p>\n<p>So Cass, let\u2019s just jump right into this and start by defining what is algorithmic harm.<\/p>\n<p><strong>Cass Sunstein<\/strong>: Let\u2019s use Star Wars, say the Jedi Knights use algorithms and they give people things that fit with their tastes and interests and information, and people get, if they\u2019re interested in books on behavioral economics, that\u2019s what they get at a price that suits them. If they\u2019re interested in a book on Star Wars, that\u2019s what they get at a price that suits them.<\/p>\n<p>The Sith by contrast, take advantage with algorithms of the fact that some consumers lack information and some consumers suffer from behavioral biases. We\u2019re gonna focus on consumers first. If people don\u2019t know much, let\u2019s say about healthcare products, an algorithm might know that, that they\u2019re likely not to know much. It might say, we have a fantastic baldness cure for you, here it goes and people will be duped and exploited. So that\u2019s exploitation of absence of information \u2013 that\u2019s algorithmic harm.<\/p>\n<p>If people are super optimistic and they think that some new product is gonna last forever, when it tends to break on first usage, then the algorithm can know those are unrealistically optimistic people and exploit their behavioral bias.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: I referenced a few obvious areas where algorithms are taking place. Uber pricing is one; the books you see on Amazon is algorithmically driven. Clearly a lot of social media \u2013 for better or worse \u2013 is algorithmically driven. Even things like the sort of music you hear on Pandora.<\/p>\n<p>What are some of the less obvious examples of how algorithms are affecting consumers and regular people every day?<\/p>\n<p><strong>Cass Sunstein<\/strong>: Let\u2019s start with the straightforward ones and then we\u2019ll get a little subtle.<\/p>\n<p>Straightforwardly, it might be that people are being asked to pay a price that suits their economic situation. So if you owe a lot of money, the algorithm knows that maybe the price will be twice as much as it would be if you were less wealthy. That I think is basically okay. It leads to greater efficiency in the system. It\u2019s like rich people will pay more for the same product than poor people and the algorithm is aware of that. That\u2019s not that subtle, but it\u2019s important.<\/p>\n<p>Also, not that subtle is targeting people based on what\u2019s known about their particular tastes and preferences. (Let\u2019s put wealth to one side). And it\u2019s known that certain people are super interested in dogs, other people are interested in cats, and all that is very straightforward happening. If consumers are sophisticated and knowledgeable, that can be a great thing to make markets work better. If they aren\u2019t, it can be a terrible thing to make consumers get manipulated and hurt.<\/p>\n<p>Here\u2019s something a little more subtle. If an algorithm knows, for example, that you like Olivia Rodrigo (and I hope you do \u2019cause she\u2019s really good), then gonna be a lot of Olivia Rodrigo songs that are gonna be put into your system. Let\u2019s say there, no one\u2019s really like Olivia Rodrigo, but let\u2019s suppose there are others who are vaguely like her, and you\u2019re gonna hear a lot of that.<\/p>\n<p>Now that might seem not like algorithmic harm, that might seem like a triumph of freedom and markets. But it might mean that piece people\u2019s tastes will calcify, and we\u2019re going to get very balkanized culturally with respect to what people see in here.<\/p>\n<p>They\u2019re gonna be Olivia Rodrigo people, and then they\u2019re gonna be Led Zeppelin people, and they\u2019re gonna be Frank Sinatra people. And there was another singer called Bach, I guess I don\u2019t know much about him, but there\u2019s Bach and there would be Bach people. And that\u2019s culturally damaging and it\u2019s also damaging for the development of individual tastes and preferences.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: So let\u2019s put this into a, a little broader context than simply musical tastes. (And I like all of those). haven\u2019t become balkanized yet, but when we look at consumption of news media, when we look at consumption of information, it really seems like the country has self-divided itself into these happy little media bubbles that are either far left leaning or far right leaning, which are kind, is kind of weird because I always learn the bulk of the country and the traditional bell curve, most people are somewhere in the middle. Hey, maybe they\u2019re center right or center left, but they\u2019re not out on the tails.<\/p>\n<p>How does these algorithms affect our consumption of news and information?<\/p>\n<p><strong>Cass Sunstein<\/strong>: About 15, 20 years ago, there was a lot of concern that through individual choices, people would create echo chambers in which they would live. That\u2019s a fair concern and it has created a number of let\u2019s say challenges for self-government and learning.<\/p>\n<p>What you\u2019re pointing to is also emphasized in the book, which is that algorithms can echo chamber, you. An algorithm might say, \u201cyou\u2019re keenly interested in immigration and you have this point of view, so boy are we gonna funnel to you lots of information.\u201d Cause clicks are money and you\u2019re gonna be clicking, clicking, clicking, click kicking.<\/p>\n<p>And that might be a very good thing from the standpoint of the seller, so to speak, or the user of the algorithm. But from the standpoint of view, it\u2019s not so fantastic. And from the standpoint of our society, it\u2019s less than not so fantastic because people will be living in algorithm driven universes that are very separate from one another, and they can end up not liking each other very much.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: Even worse than not liking each other, their view of the world aren\u2019t based on the same facts or the same reality. Everybody knows about Facebook and to a lesser degree, TikTok and Instagram and how it very much balkanized people into things. We\u2019ve seen that in, in the world of media. You have Fox News over here and MSNBC over there.<\/p>\n<p>How significant of a threat. Does algorithmic news feeds present to the country as a democracy, a self-regulating, self-determined democracy?<\/p>\n<p><strong>Cass Sunstein<\/strong>: Really significant! There\u2019s algorithms and then there are large language models, and they can both be used to create situations in which, let\u2019s say the people in.<\/p>\n<p>Some city, let\u2019s call it Los Angeles, are seeing stuff that creates a reality that\u2019s very different from the reality that people are seeing in let\u2019s say Boise, Idaho. And that can be a real problem for understanding one another and also for mutual problem solving.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: So let\u2019s apply this a little bit more to consumers and markets. You describe two specific types of algorithmic discrimination. One is price discrimination and the other is quality discrimination. Why should we be aware of this distinction? Do they both deserve regulatory attention?<\/p>\n<p><strong>Cass Sunstein<\/strong>: So if there is price discrimination through algorithms in which different people get different offers, depending on what the algorithm knows about their wealth and tastes, that\u2019s one thing.<\/p>\n<p>And it might be okay. People don\u2019t stand up and cheer and say, hooray. But if people who have a lot of resources are given an offer that\u2019s not as, let\u2019s say seductive as one that is given to people who don\u2019t have a lot of resources, just because the price is higher for the rich than the poor, that that\u2019s okay .There\u2019s something efficient and market friendly about that.<\/p>\n<p>If it\u2019s the case that people who are not caring much about whether a tennis racket is gonna break after multiple uses, and other people who think the tennis racket really has to be solid because I play every day and I\u2019m gonna play for the next five years. Then some people are given let\u2019s say. Immortal Tennis racket and other, other people are given the one that\u2019s more fragile, that\u2019s also okay.<\/p>\n<p>So long as we\u2019re dealing with people who have a level of sophistication, they know what they\u2019re getting and they know what they need.<\/p>\n<p>If it\u2019s the case that for either pricing or for quality, the algorithm is aware of the fact that certain consumers are particularly likely not to have relevant information, then everything goes haywire. And if this isn\u2019t frightening enough, note that algorithms are an increasingly excellent position to know: \u201cThis person with whom I\u2019m dealing doesn\u2019t know a lot about whether products are gonna last\u201d and I can exploit that. Or \u201cthis person is very focused on today and tomorrow and next year doesn\u2019t really matter, the person\u2019s present biased,\u201d and I can exploit that.<\/p>\n<p>And that\u2019s something that can damage vulnerable consumers a lot, either with respect to quality or with respect to pricing.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: Let\u2019s flesh that out a little more. I\u2019m very much aware that when Facebook sells ads, because I\u2019ve been pitched these from Facebook, they could target an audience based on not just their likes and dislikes, but their geography, their search history, their credit score, their purchase history. They know more about you than you know about yourself. \u00a0It seems like we\u2019ve created an opportunity for some potentially abusive behavior. Where is the line crossed \u2013 from hey, we know that you like dogs, and so we\u2019re gonna market dog food to you, to, we know everything there is about you, and we\u2019re gonna exploit your behavioral biases and some of your emotional weaknesses.<\/p>\n<p><strong>Cass Sunstein<\/strong>: So suppose there\u2019s a population of Facebook users who are, you know, super well-informed about food and, really rational about food. So they particularly happen to be fond of sushi, and Facebook is going hard at them with respect to offers for sushi and so forth.<\/p>\n<p>Now let\u2019s suppose there\u2019s another population, which is they know what they like about food, but they have kind of hopes and, uh, false beliefs both about the effective food on health. Then you can really market to them things that will lead to poor choices.<\/p>\n<p>And I\u2019ve made a stark distinction between fully rational, which is kind of economic speak and, you know, imperfectly informed and behaviorally biased people, also economic speak, but it\u2019s, it\u2019s really intuitive.<\/p>\n<p>There\u2019s a radio show, maybe this will bring it home that I listen to when I drive into work and there\u2019s a lot of marketing about a product that is supposed to relieve pain. And I don\u2019t want to criticize any producer of any product, but I have reason to believe that the relevant product doesn\u2019t help much, but the station that is marketing this product to people, this pain relief product must know that the audience is vulnerable to it and they must know exactly how to get at them.<\/p>\n<p>And that\u2019s not gonna make America great again.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: To say the very least. So we, we\u2019ve been talking about algorithms, but obviously the subtext is artificial intelligence, which seems to be the natural extension and further development of, of algos. Tell us how, as AI becomes more sophisticated and pervasive, how is this gonna impact our lives as, as employees, as consumers, as mem citizens?<\/p>\n<p><strong>Cass Sunstein<\/strong>: Chat GPT chances are knows a lot about everyone who uses it. So I actually asked Chat GPT recently. I use it some, not hugely. I asked it to say some things about myself and it said a few things that were kind of scarily precise about me, based on some number, dozens, not hundreds I don\u2019t think of engagements with chat GPT.<\/p>\n<p>Large language models that track your prompts can know a lot about you, and if they\u2019re able also to know your name, they can, you know, instantly basically learn a ton about you online. We need to have privacy protections that are working there still. It\u2019s the case that AI broadly is able to use algorithms \u2013 and generative AI can go well beyond the algorithms we\u2019ve gotten familiar with \u2013 both to make the beauty of algorithmic engagement. That is, here\u2019s what you like, here\u2019s what you want, we\u2019re gonna help you and the ugliness of algorithms, here\u2019s how we can exploit you to get you to buy things. And of course I\u2019m thinking of investments too.<\/p>\n<p>So in your neck of the woods, it would be child\u2019s play to get people super excited about investments, which AI knows the people with whom it\u2019s engaging are particularly susceptible to, even though they\u2019re really dumb engagements.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: Since we\u2019re talking about investing, I can\u2019t help but bring up both AI and algorithms trying to increase so-called market efficiency. Uh, and I always go back to Uber\u2019s surge pricing. Soon as it starts to rain, the prices go up in the city. It\u2019s obviously not an emergency, it\u2019s just an annoyance. \u00a0However, we do see situations of price gouging after a storm, after a hurricane, people only have so many batteries and so much plywood, and they kind of crank up prices.<\/p>\n<p>How do we determine what is the line between something like surge pricing and something like, abusive price gouging.<\/p>\n<p><strong>Cass Sunstein<\/strong>: Okay, so you\u2019re in a terrific area of behavioral economics, so we know that in circumstances in which, let\u2019s say demand, goes up high, because everyone needs a shovel and it\u2019s a snow storm. People are really mad if the prices go up, though it might be just a sensible market adjustment. So as a first approximation, if there\u2019s a spectacular need for something, let\u2019s say shovels or umbrellas, the market, inflation of the cost, while it\u2019s morally abhorrent to many, and maybe in principle morally abhorrent from the standpoint of standard economics, it\u2019s okay.<\/p>\n<p>Now, if it\u2019s the case that people under short-term pressure from the fact that there\u2019s a lot of rain are especially vulnerable, they\u2019re in some kind of emotionally intense state, they\u2019ll pay kind of anything for an umbrella. Then there\u2019s a behavioral bias, which is motivating people\u2019s willingness to pay a lot more than the product is worth.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: Let\u2019s talk a little bit about disclosures and the sort of mandates that are required. When we look across the pond, when we look at Europe, they\u2019re much more aggressive about protecting privacy and making sure big tech companies are disclosing all the things they have to disclose. How far behind is the US in that generally? And are we behind when it comes to disclosures about algorithms or AI?<\/p>\n<p><strong>Cass Sunstein<\/strong>: I think we\u2019re behind them in the sense that we\u2019re less privacy focused, but it\u2019s not clear that that\u2019s bad. And even if it isn\u2019t good, it\u2019s not clear that it\u2019s terrible. I think neither Europe nor the US has put their regulatory finger on the actual problem.<\/p>\n<p>So let\u2019s take the problem of algorithms, not figuring out what people want, but algorithms exploiting a lack of information or a behavioral bias to get people to buy things at prices that aren\u2019t good for them \u2013 that that\u2019s a problem. It\u2019s in the same universe as fraud and deception. And the question is, what are we gonna do about it?<\/p>\n<p>A first line of defense is to try to ensure consumer protection, not through heavy handed regulation. I\u2019m a longtime University of Chicago person. I have in my DNA (note enviornment) , not liking heavy handed regulation, but through helping people to know what they\u2019re buying.<\/p>\n<p>Helping people not to suffer from a behavioral bias, such as, let\u2019s say, incomplete attention or unrealistic optimism when they\u2019re buying things. So these are standard consumer protection things, which many of our agencies in the US homegrown made in America. They\u2019ve done that and that\u2019s good and we need more of that. So that\u2019s first line of defense.<\/p>\n<p>Second line of defense isn\u2019t to say, you know, uh, privacy, privacy, privacy. Though maybe that\u2019s a good song to sing. It\u2019s to say Al right to algorithmic transparency. This is something which neither the us nor Europe, nor Asia, nor South America, nor Africa, has been very advanced on.<\/p>\n<p>This is a coming thing where we need to know what the algorithms are doing. So it\u2019s public. What\u2019s Amazon\u2019s algorithm doing? That would be good to know. And it shouldn\u2019t be the case that some efforts to ensure transparency invade Amazon\u2019s legitimate rights.<\/p>\n<p><strong>Barry Ritholtz<\/strong>: Really, really fascinating.<\/p>\n<p>Anybody who is participating in the American economy and society, consumers, investors, even just regular readers of news, needs to be aware of how algorithms are affecting what they see, the prices they pay, and the sort of information they\u2019re getting. With a little bit of forethought and the book \u201cAlgorithmic Harm\u201d you can protect yourself from the worst aspects of algorithms and AI.<\/p>\n<p>I\u2019m Barry Ritholtz. You are listening to Bloomberg\u2019s At the Money.<\/p>\n<p>\u00a0<\/p>\n<div class=\"printfriendly pf-button pf-button-content pf-alignleft\">\n<p>                    <img decoding=\"async\" class=\"pf-button-img\" src=\"https:\/\/cdn.printfriendly.com\/buttons\/printfriendly-button.png\" alt=\"Print Friendly, PDF &amp; Email\" style=\"width: 112px;height: 24px;\"\/><\/p><\/div>\n<\/div>\n<p><a href=\"https:\/\/ritholtz.com\/2025\/06\/atm-algorithmic-harm\/\"> Nuoroda \u012f informacijos \u0161altin\u012f <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\ufeff \ufeff \u00a0 \u00a0 At The Money: Algorithmic Harm with Professor Cass Sunstein, Harvard Law What is the impact of \u201c\u200aAlgorithms\u201d on the prices you pay for your Uber, what gets fed to you on TikTok, even the prices you pay in the supermarket? Full transcript below. ~~~ About this week\u2019s guest: Cass Sunstein, professor [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":62,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[3852,3853,169],"class_list":["post-2251","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ekonomika-finansai-bankininkyste","tag-algorithmic","tag-harm","tag-money"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/posts\/2251","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/comments?post=2251"}],"version-history":[{"count":0,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/posts\/2251\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/media\/62"}],"wp:attachment":[{"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/media?parent=2251"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/categories?post=2251"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/tags?post=2251"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}