Thanks to the internet, you don’t need to leave your house to buy most things...you can just buy them on Amazon. Reviews seem fishy? Easy...plug the item’s URL into Fakespot, an algorithm that does its best to judge how many of the reviews are legit, giving you an altered score.
When you're a buyer, you now have liquid access to vastly more information than you did before. You’re not limited to the selection of soaps on a grocery store shelf; you have the whole internet at your fingertips, plus reviews (and review police). What products thrive online or die on the vine is largely due to this access to information about the products, creating a more efficient market (at least in theory) than before the internet was a thing.
The inspection of pricing via smart-ish technology has increased market efficiency pretty much across the board. Not too long ago, stock market trading was done “on the floor” with crazy dudes yelling at each other in a flurry, with trades happening at a glacial pace. Today, we’ve got algorithms trading faster than our little human brains can even comprehend.
Like you with your soap, investors and brokerages have more information about stocks, companies, and performance than ever before. They can make algorithms with data that previously wasn’t possible. Technology has brought information and accessibility to the forefront, making the market more efficient. Still, it’s not fully efficient, especially when the information out there is asymmetric, or when people are lying. Surely you’ve seen bad reviews on Amazon complaining about how the product shipped was nothing like the picture. That’s an inefficiency right there. But ironically, them telling you the “truth” about the product is helping to create a more efficient market by informing you, another potential buyer, to maybe shop elsewhere.
Likewise, research and high-frequency trading are great for increased market efficiency...but only up to a point. If there’s too much high-frequency trading that is all reacting the same way to market changes, it can create a sudden sell-off, causing extremely quick and dramatic increases and decreases in the value of securities, not to mention glitches.
Technology might be smarter and faster than we are, but it’s got its fair share of problems as well.
Related or Semi-related Video
Econ: How does Technology Change Market ...6 Views
And finance Allah shmoop What is technological change Well let's
see We all benefit from technology Just think about it
We're talking to you through time and space thanks to
a little thing called the Internet Yeah great No big
deal In economics technological change is used to describe anything
that increases output without increasing input In other words technological
changes magic It's anything that makes creating economic value more
efficient like the Internet and computers are tools that we
often think of when we hear technology But changes in
processes count as technology as well For instance the invention
of the assembly line and great process there was first
put into play by Henry Ford in the late nineteen
twenties and it was the key to making mass production
possible By combining the use of machines with stationed workers
and interchangeable parts Ford was able to produce far more
vehicles with the same amount of inputs as before Even
hammers wristwatches and dialogue were once leading technological change Today
we've got self driving cars flying cars three D printing
and neural network development increasing market efficiency and well yes
Granted our relationship with technology has never been straightforward in
the case of the assembly line While workers in Ford's
factories did have better working conditions In some ways they
had worse working conditions In other ways workers didn't have
to do any heavy lifting or low stooping like they
did before And there were jobs almost anyone could dio
plus the assembly line allowed for to pass on some
of those efficiency gains from technological change to workers wage
improvements Despite these benefits the turnover at Ford's assembly line
jobs was incredibly high For a while workers could on
Lee do the mind numbing jobs for so long It
was also argued by Karl Marx that doing the same
little repetitive task over and over and over again made
it difficult for workers to feel like they were actually
contributing anything meaningful in their jobs Well guess what The
turnover at Ford's factories was so high that Ford decided
to give his workers two days off working only five
days a week eight hours a day What a concept
That's right The technological change of assembly lines lead to
increased market efficiency and supreme boredom among workers which then
led to the forty hour work week who go forward
Increasingly these repetitive type tasks are being done by advanced
robots Even more creative jobs like writing for shmoop and
making music composition are now being done by robots It's
nothing personal It just makes sense for business to use
more robots If doing so allows them to doom or
with less well as technological change progresses it's increasingly a
concern that robots will take up so many jobs There
won't be many left for a human Beings will have
a huge part of the workforce just permanently unemployed then
Plus most economic gains from technological change in the last
several decades haven't ended up in workers pockets which is
kind of a concern We've always had a love hate
relationship with technological change We love how easy it makes
our lives but sometimes it makes them too easy can't
live with robots and well can't live without him What