Why You Should Care About The End of Information Asymmetry
By Josh Wolfe
A very smart hedge fund friend shared an excellent post on the changing economics in markets because of the abundance of information from cheap sensors, active monitoring and self-revealing, and the resulting scarcity of information asymmetry. (Where I am selling you something and I know something you don’t.) A lemon of a car is the iconic example. The widespread installation of odometers changed the game, giving a quantifiable measure (or at least proxy) for the value of the car based on its usage.
You should read the piece here. It sparked the following thoughts from me:
1. Stewart Brand said: “information wants to be free”**. I do believe tech helps us ‘trend towards truth’ (on balance; from data detection to DNA exoneration…though no doubt tools also abound to obfuscate from photoshop to doctored recordings & false signals)
2. There are complex tradeoffs for us all to consider between revealing vs. receiving, giving vs getting, transparency vs. anonymity, and information vs privacy. Self-revealing is informational currency that is an ante up to be part of network to share or reap from the network’s benefits. I am typing this while my wife drives using Waze in traffic. We reveal and give vectors of speed and location in exchange we receive info and analysis of all others doing same.
It will only be a matter of time before highway patrol less necessary, as sensors from crowds of cars self-monitor, police and report offenders, instantly debiting electronic funds for fines just as EZ-Pass does thru tolls. Have you ever wanted to easily report a reckless driver that just cut you off as he flees your sight? “Big Brother” is increasingly “Us”.
3. On that, I do think the Panopticon serves the public good more than the fear that it creates a surveillance state. We are watching the watchmen (as the current zeitgeist around police violence has been captured). Meanwhile, a friend has a startup that tracks digital footprints of employees for tipoffs of aberrant behavior (i.e. Alice and Bob never meet in a certain conference room — as tracked/revealed by access badges or phones — but suddenly Alice is printing to a different printer on the network that she hasn’t in the past and the two of them are meeting at odd hours).
4. Another phenomenon, for better or worse (likely both, time will tell): pundits, pols, forecasters and promotional CEOs (!) who today make predictions or bold claims will also have long records of assessable, quantifiable, verifiable scores. Today we rely on the interns and researchers at The Daily Show for the playful opposition research that reveals hypocrisy and we laugh as they eat their words . Tomorrow, bots will do a decent job on cross-referenced veracity of statements. Phil Tetlock has a very cool book coming out soon on parts of this.
5. My favorite example of all this is the El Farol problem. It comes from complexity scientist Brian Arthur, who while working at the Sante Fe Institute (whose Board I enthusiastically just joined) would go to the El Farol bar. This is the epitome of asymmetric info and markets as complex adaptive systems that under and overshoot reality/truth. But when Brian Arthur conceived it, modern apps (like Foursquare) and mobile phones didn’t exist to reveal all this info today.
6. Another thought-provoking book if you’d like to read more on this, which relates to the timeless form of information asymmetry (i.e. deception & counter-deception in all forms, honest signaling/false signaling) throughout history and biology is Robert Trivers’ Folly of Fools.
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**He actually said “On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”
