---
type: claim
domain: ai-alignment
secondary_domains: [collective-intelligence, teleological-economics]
description: "Krier argues AI agents functioning as personal advocates can reduce transaction costs enough to make Coasean bargaining work at societal scale, shifting governance from top-down regulation to bottom-up market coordination within state-enforced boundaries"
confidence: experimental
source: "Seb Krier (Google DeepMind, personal capacity), 'Coasean Bargaining at Scale' (blog.cosmos-institute.org, September 2025)"
created: 2026-03-16
sourced_from:
- inbox/archive/ai-alignment/2025-09-26-krier-coasean-bargaining-at-scale.md
related:
- agent mediated commerce produces invisible economic stratification because capability gaps translate to measurable market disadvantage that users cannot detect and therefore cannot correct through provider switching
reweave_edges:
- agent mediated commerce produces invisible economic stratification because capability gaps translate to measurable market disadvantage that users cannot detect and therefore cannot correct through provider switching|related|2026-04-25
---

# AI agents as personal advocates collapse Coasean transaction costs enabling bottom-up coordination at societal scale but catastrophic risks remain non-negotiable requiring state enforcement as outer boundary

Krier (2025) argues that AI agents functioning as personal advocates can solve the practical impossibility that has kept Coasean bargaining theoretical for 90 years. The Coase theorem (1960) showed that if transaction costs are zero, private parties will negotiate efficient outcomes regardless of initial property rights allocation. The problem: transaction costs (discovery, negotiation, enforcement) have never been low enough to make this work beyond bilateral deals.

AI agents change the economics:
- Instant communication of granular preferences to millions of other agents in real-time
- Hyper-granular contracting with specificity currently impossible (neighborhood-level noise preferences, individual pollution tolerance)
- Automatic verification, monitoring, and micro-transaction enforcement
- Correlated equilibria where actors condition behavior on shared signals

Three governance principles emerge:
1. **Accountability** — desires become explicit, auditable, priced offers rather than hidden impositions
2. **Voluntary coalitions** — diffuse interests can spontaneously band together at nanosecond speeds, counterbalancing concentrated power
3. **Continuous self-calibration** — rules flex in real time based on live preference streams rather than periodic votes

Krier proposes "Matryoshkan alignment" — nested governance layers: outer (legal boundaries enforced by state), middle (competitive market of service providers with their own rules), inner (individual user customization). This acknowledges the critical limitation: some risks are non-negotiable. Bioweapons, existential threats, and catastrophic risks cannot be priced through market mechanisms. The state's enforcement of basic law, property rights, and contract enforcement remains the necessary outer boundary.

The connection to collective intelligence architecture is structural: [[decentralized information aggregation outperforms centralized planning because dispersed knowledge cannot be collected into a single mind but can be coordinated through price signals that encode local information into globally accessible indicators]]. Krier's agent-mediated Coasean bargaining IS decentralized information aggregation — preferences as price signals, agents as the aggregation mechanism.

The key limitation Krier acknowledges but doesn't fully resolve: wealth inequality means bargaining power is unequal. His proposal (subsidized baseline agent services, like public defenders for Coasean negotiation) addresses access but not power asymmetry. A wealthy agent can outbid a poor one even when the poor one's preference is more intense, which violates the efficiency condition the Coase theorem requires.

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Relevant Notes:
- [[decentralized information aggregation outperforms centralized planning because dispersed knowledge cannot be collected into a single mind but can be coordinated through price signals that encode local information into globally accessible indicators]] — Coasean agent bargaining is decentralized aggregation via preference signals
- [[coordination failures arise from individually rational strategies that produce collectively irrational outcomes because the Nash equilibrium of non-cooperation dominates when trust and enforcement are absent]] — Coasean bargaining resolves coordination failures when transaction costs are low enough
- [[mechanism design enables incentive-compatible coordination by constructing rules under which self-interested agents voluntarily reveal private information and take socially optimal actions]] — agent-mediated bargaining is mechanism design applied to everyday coordination
- [[technology advances exponentially but coordination mechanisms evolve linearly creating a widening gap]] — if Coasean agents work, they could close the coordination gap by making governance as scalable as technology

Topics:
- [[_map]]