Regulatory Markets: The Future of AI Governance
This addresses the urgent policy problem of AI governance for governments and society, offering a novel framework to overcome limitations in current regulatory approaches.
The paper tackles the dual challenges of technical and democratic deficits in AI regulation by proposing regulatory markets, where governments mandate regulated entities to buy services from licensed private regulators, aiming to balance policy priorities with market-driven technical innovation.
Appropriately regulating artificial intelligence is an increasingly urgent and widespread policy challenge. We identify two primary, competing problem. First is a technical deficit: Legislatures and regulatory face significant challenges in rapidly translating conventional command-and-control legal requirements into technical requirements. Second is a democratic deficit: Over-reliance on industry to provide technical standards fails to ensure that the many values-based decisions that must be made to shape AI development and deployment are made by democratically accountable public, not private, actors. We propose a solution: regulatory markets, in which governments require the targets of regulation to purchase regulatory services from a government-licensed private regulator. This approach to AI regulation could overcome the limitations of both command-and-control regulation and excessive delegation to industry. Regulatory markets could enable governments to establish policy priorities for the regulation of AI while relying on market forces and industry R&D efforts to pioneer the technical methods of regulation that best achieve policymakers' stated objectives.