New Rules of the Digital Economy: Who Are the Winners? Ken Binmore ELSECo University College London k.binmore@ucl.ac.uk

old economic environment trial and error learning profitable action old rules of thumb fundamental economic principles unprofitable action mechanism design new rules of thumb profitable action new economic environment

      naïve search sellers cheapest price buyers automated agent delivery search sellers cheapest price

      product differentiation personalized products purchase information price price discrimination

         sophisticated agents answer question common agents mechanism design revelation principle

  auctions autmated markets multiple bilateral bargaining question economic enviroments question   game theory answer multiple bargaining strategies

network externalities information goods cheap cheap costly copy 1 copy 2 copy 3 copy 4 copy 5 cheap cheap cost curves marginal cost marginal cost quantity quantity information good traditional good network externalities

         sophisticated agents answer question common agents mechanism design revelation principle