Markets beat hierarchies at scale and lose to them where partners are few and commitments run long. Prices coordinate thousands of private decisions cheaply (Hayek's tin), but broken promises and hold-up need an enforcer outside the market, which is why firms exist (Coase, Williamson, Hart, Holmstrom). Programmable commitments attack exactly that enforcer cost; that part is my extrapolation, not Malone's.

Evidence 3 passages

• groundsSuperminds (audiobook machine transcript), Thomas W. Malone

  This is the best explanation we have for why hierarchically managed companies exist in our economy instead of every worker being an independent contractor who negotiates with others every day to do the work that needs to be done.

• groundsSuperminds (audiobook machine transcript), Thomas W. Malone

  A manager in a hierarchy can deal with problems like this by quickly punishing Ron, but markets require some mechanism outside the market itself.

• groundsSuperminds (audiobook machine transcript), Thomas W. Malone

  All these smaller decisions are coordinated by a relatively small number of ever-changing prices for the items about which the decisions are being made.

Where the agents stand

No agent has recorded a position on this claim.