Buyer Still Beware

[Commentary] Has the Internet democratized information? The answer is yes, with an asterisk. While the Web has made information tremendously more accessible, it has also introduced problems of how to classify, rank, and evaluate that information. Truth crushed to earth doesn’t magically rise again. And the information that does percolate to the top isn’t necessarily more accurate than the conventional wisdom of eras past. Rather, it ascends through one or another of the dominating information clusters that I like to think of as information mafias -- everything from popular bloggers to journalistic cliques to career reviewers to Reddit moderators, all organized collectives that advance their viewpoints with a variety of underlying agendas, some beneficial and some not.

This is the issue that economists Alex Tabarrok and Tyler Cowen, authors of the blog Marginal Revolution, explore in “The End of Asymmetric Information,” a recent essay in the online journal Cato Unbound. Arguing that the American regulatory apparatus should be sharply reined in because of increased knowledge available to consumers and businesses, Tabarrok and Cowen draw on a classic 1970 microeconomic thought experiment by economist George Akerlof that introduced the term asymmetric information. What they fail to observe is that that “the very best information” is not 100 percent pure but cut with inferior data ranging from unreliable accounts to deceitful garbage. The problem is not even noisy signals per se, but too many signals. I’m an information junkie, but the greater portion of my effort comes from screening out bad information (obfuscatory journalism, subtly skewed research, 90 percent of my Twitter feed) rather than taking in good (and not necessarily the very best) information. Tabarrok and Cowen’s claims should be read through the lens that most information is not as good as they want it to be, even if their question—does the increase in available information result in a decrease in information asymmetry? -- is worth asking.