IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2303.03174.html
   My bibliography  Save this paper

Both eyes open: Vigilant Incentives help Regulatory Markets improve AI Safety

Author

Listed:
  • Paolo Bova
  • Alessandro Di Stefano
  • The Anh Han

Abstract

In the context of rapid discoveries by leaders in AI, governments must consider how to design regulation that matches the increasing pace of new AI capabilities. Regulatory Markets for AI is a proposal designed with adaptability in mind. It involves governments setting outcome-based targets for AI companies to achieve, which they can show by purchasing services from a market of private regulators. We use an evolutionary game theory model to explore the role governments can play in building a Regulatory Market for AI systems that deters reckless behaviour. We warn that it is alarmingly easy to stumble on incentives which would prevent Regulatory Markets from achieving this goal. These 'Bounty Incentives' only reward private regulators for catching unsafe behaviour. We argue that AI companies will likely learn to tailor their behaviour to how much effort regulators invest, discouraging regulators from innovating. Instead, we recommend that governments always reward regulators, except when they find that those regulators failed to detect unsafe behaviour that they should have. These 'Vigilant Incentives' could encourage private regulators to find innovative ways to evaluate cutting-edge AI systems.

Suggested Citation

  • Paolo Bova & Alessandro Di Stefano & The Anh Han, 2023. "Both eyes open: Vigilant Incentives help Regulatory Markets improve AI Safety," Papers 2303.03174, arXiv.org.
  • Handle: RePEc:arx:papers:2303.03174
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2303.03174
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ron N. Borkovsky & Ulrich Doraszelski & Yaroslav Kryukov, 2009. "A Dynamic Quality Ladder Model with Entry and Exit: Exploring the Equilibrium Correspondence Using the Homotopy Method," GSIA Working Papers 2010-E2, Carnegie Mellon University, Tepper School of Business.
    2. Doraszelski, Ulrich & Kryukov, Yaroslav & Borkovsky, Ron N., 2009. "A Dynamic Quality Ladder Model with Entry and Exit: Exploring the Equilibrium Correspondence Using the Homotopy Method," CEPR Discussion Papers 7560, C.E.P.R. Discussion Papers.
    3. Brett Hollenbeck, 2020. "Horizontal mergers and innovation in concentrated industries," Quantitative Marketing and Economics (QME), Springer, vol. 18(1), pages 1-37, March.
    4. Han, The Anh & Lenaerts, Tom & Santos, Francisco C. & Pereira, Luís Moniz, 2022. "Voluntary safety commitments provide an escape from over-regulation in AI development," Technology in Society, Elsevier, vol. 68(C).
    5. Tabarrok, Alexander, 1998. "The Private Provision of Public Goods via Dominant Assurance Contracts," Public Choice, Springer, vol. 96(3-4), pages 345-362, September.
    6. Joung-Hun Lee & Yoh Iwasa & Ulf Dieckmann & Karl Sigmund, 2019. "Social evolution leads to persistent corruption," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 116(27), pages 13276-13281, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Esmat Zaidan & Imad Antoine Ibrahim, 2024. "AI Governance in a Complex and Rapidly Changing Regulatory Landscape: A Global Perspective," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-18, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Linjie & Chen, Xiaojie, 2022. "Effects of interconnections among corruption, institutional punishment, and economic factors on the evolution of cooperation," Applied Mathematics and Computation, Elsevier, vol. 425(C).
    2. Wilson, Nathan E., 2012. "Uncertain regulatory timing and market dynamics," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 102-115.
    3. Esmée S. R. Dijk & José L. Moraga‐González & Evgenia Motchenkova, 2024. "How Do Start‐up Acquisitions Affect the Direction of Innovation?," Journal of Industrial Economics, Wiley Blackwell, vol. 72(1), pages 118-156, March.
    4. Flores, Lucas S. & Han, The Anh, 2024. "Evolution of commitment in the spatial public goods game through institutional incentives," Applied Mathematics and Computation, Elsevier, vol. 473(C).
    5. Salazar, Verónica & Szentes, Balázs, 2024. "On the coevolution of cooperation and social institutions," European Economic Review, Elsevier, vol. 161(C).
    6. Zhi Li & Dongsheng Chen & Pengfei Liu, 2023. "Assurance payments on the coordination of threshold public goods provision: An experimental investigation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(2), pages 407-436, April.
    7. Wang, Jianwei & Xu, Wenshu & Yu, Fengyuan & He, Jialu & Chen, Wei & Dai, Wenhui, 2024. "Evolution of cooperation under corrupt institutions," Chaos, Solitons & Fractals, Elsevier, vol. 184(C).
    8. Tan, Bing Qing & Kang, Kai & Zhong, Ray Y., 2023. "Electric vehicle charging infrastructure investment strategy analysis: State-owned versus private parking lots," Transport Policy, Elsevier, vol. 141(C), pages 54-71.
    9. Trent J. MacDonald, 2019. "The Political Economy of Non-Territorial Exit," Books, Edward Elgar Publishing, number 18871, March.
    10. Michele Bisceglia & Jorge Padilla & Joe Perkins & Salvatore Piccolo, 2024. "Optimal Exit Policy with Uncertain Demand," Journal of Industrial Economics, Wiley Blackwell, vol. 72(1), pages 516-547, March.
    11. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram & Freer, Mikhail, 2022. "Revealed preference analysis of expected utility maximization under prize-probability trade-offs," Journal of Mathematical Economics, Elsevier, vol. 99(C).
    12. Christopher Teh & Dyuti Banerjee & Chengsi Wang, 2022. "Acquisition-induced kill zone," Monash Economics Working Papers 2022-24, Monash University, Department of Economics.
    13. Cason, Timothy N. & Zubrickas, Robertas, 2019. "Donation-based crowdfunding with refund bonuses," European Economic Review, Elsevier, vol. 119(C), pages 452-471.
    14. Donatella Gatti & Julien Vauday, 2024. "AI Diffusion, Disasters, Environmental and Social Change," Working Papers hal-04604374, HAL.
    15. Salazar Restrepo, Verónica & Szentes, Balázs, 2024. "On the coevolution of cooperation and social institutions," LSE Research Online Documents on Economics 119490, London School of Economics and Political Science, LSE Library.
    16. Jean-Michel Benkert & Igor Letina & Shuo Liu, 2023. "Startup Acquisitions: Acquihires and Talent Hoarding," Papers 2308.10046, arXiv.org, revised Feb 2025.
    17. Suguru Otani & Takuma Matsuda, 2023. "Unified Merger List in the Container Shipping Industry from 1966 to 2022: A Structural Estimation of M&A Matching," Papers 2310.09938, arXiv.org, revised Dec 2024.
    18. Álvaro Parra & Guillermo Marshall, 2024. "Monopsony Power and Upstream Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 72(2), pages 1005-1020, June.
    19. Katz, Michael L., 2021. "Big Tech mergers: Innovation, competition for the market, and the acquisition of emerging competitors," Information Economics and Policy, Elsevier, vol. 54(C).
    20. Lattimer, Timothy R.B. & Zubrickas, Robertas, 2023. "Refund bonuses and revenue equivalence," Economics Letters, Elsevier, vol. 231(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2303.03174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.