[FOR INTERNAL REVIEW] Andrey Fradkin - What Happens to Markets When AI Agents Do the Negotiating

If AI agents can represent us in negotiations, handle our hiring, shop on our behalf, and coordinate across firms without friction, a lot of what economists call market failures start to look solvable. That used to just be a thought experiment, but it might be getting closer and closer to reality.

Topics covered:

• Why the entire economy right now is essentially a bet on AI yielding large productivity gains
• The cosine singularity: what markets look like when agents negotiate on our behalf and transaction costs collapse
• Why AI could potentially make the labor market more like professional sports, where performance is always being observed
• The best workers are often purposely not doing what their job description says, and why a panopticon would miss that
• Why intelligence has diminishing returns, and why the returns are probably highest where it's currently scarcest
• Why the paper circuit is a waste of time right now, and what economists should be doing instead

Research mentioned:

• Fradkin et al., "The Coasean Singularity? Demand, Supply, and Market Design with AI Agents" — NBER

Check out the Justified Posteriors podcast here: https://www.justifiedposteriors.com/

Check out Andrey's website here: https://www.andreyfradkin.com/

About Andrey Fradkin: Andrey Fradkin is an assistant professor of economics at Boston University and co-host of the Justified Posteriors podcast. His research focuses on market design, platform economics, and the economics of AI.

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