Software agents and the route to the information economy

Humans are on the verge of losing their status as the sole economic species on the planet. In private laboratories and in the Internet laboratory, researchers and developers are creating a variety of autonomous economically motivated software agents endowed with algorithms for maximizing profit or utility. Many economic software agents will function as miniature businesses, purchasing information inputs from other agents, combining and refining them into information goods and services, and selling them to humans or other agents. Their mutual interactions will form the information economy: a complex economic web of information goods and services that will adapt to the ever-changing needs of people and agents. The information economy will be the largest multiagent system ever conceived and an integral part of the world's economy. I discuss a possible route toward this vision, beginning with present-day Internet trends suggesting that agents will charge one another for information goods and services. Then, to establish that agents can be competent price setters, I describe some laboratory experiments pitting software bidding agents against human bidders. The agents' superior performance suggests they will be used on a broad scale, which in turn suggests that interactions among agents will become frequent and significant. How will this affect macroscopic economic behavior? I describe some interesting phenomena that my colleagues and I have observed in simulations of large populations of automated buyers and sellers, such as price war cycles. I conclude by discussing fundamental scientific challenges that remain to be addressed as we journey toward the information economy.