This discussion paper explores the rapidly evolving landscape of how we behave and interact online, and how businesses respond. The internet has transformed how we live, work and relate to one another. We can make ‘friends’ around the world without ever saying ‘hello’, compare products from dozens of shops without leaving the house, or plan a date with a stranger without breaking a sweat. Overall it has proven a powerful force for good; delivering significant benefits to the economy and to consumers in the form of greater choice, personalization, and incredible convenience.
Yet the characteristics of online environments – the deliberate design and the ability to generate enormous quantities of data about how we behave, who we interact with and the choices we make, coupled with the potential for mass experimentation – can also leave consumers open to harm and manipulation. Many of the failures and distortions in online markets are behavioral in nature, from the deep information asymmetries that arise as a result of consumers being inattentive to online privacy notices to the erosion of civility on online platforms. This paper considers how governments, regulators and at least some businesses might seek to harness our deepening understanding of human behavior to address these failures, and to shape and guide the evolution of digital markets and online environments that really do work for individuals and communities.
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