Abstract

Online retail seems to approach the textbook ideal of a competitive market: prices are visible, product choice is abundant, and comparison is inexpensive. Yet transactions still depend heavily on social networks. Friends, reviewers, online communities, and seller reputations direct attention and reduce uncertainty where prices alone cannot resolve search and trust problems. This essay examines how artificial intelligence changes these economic functions of networks. Artificial intelligence-based shopping assistants lower search costs and substitute for human connections used mainly to obtain routine information. Recommendation systems move in the opposite direction: by feeding collective clicks, ratings, and purchases back into rankings, they can amplify social influence and concentrate demand. Generative artificial intelligence introduces a third effect. As commercial content becomes cheaper to produce, verifying its source becomes relatively more costly, revealing the continuing value of relationships based on identifiable sources, reputation, and accountability. Artificial intelligence therefore reallocates rather than eliminates the economic functions of social networks. Human connections become less important for accessing information, while their role in validating information persists. A provenance system that distinguishes accountable human signals from synthetic or paid content can reduce verification costs without sacrificing the search efficiencies created by artificial intelligence.

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