The Government Can Not Let Go Of The Consequences Of Asymmetric Information In The Information Age.

The government can not let go of the consequences of asymmetric information in the information age.

Economist Stiglitz believes that if the government lets go, the information paradigm advocated by technical experts is likely to lead to market distortions.

Supporters of the digital economy have long argued that the best way to promote prosperity is to accelerate the pformation of society into the information age.

The more data we provide, share, access and process, the better for all of us.

According to this theory, the market decisions we made on the basis of knowledge will lead to more intense competition and more empowering consumers.

But we should not forget that information is the maxim of strength.

The fact that we should not forget is that information and knowledge are not the same thing.

In the process of promoting the information economy, technical experts and entrepreneurs eager to establish the dominant position of the market may have neglected the research on information economics over the past 50 years.

The result will be a collective disadvantage for all of us.

What makes this situation particularly worrisome is that more information does not necessarily lead to more competition or social welfare, according to a set of theories that have now foothold.

With decades of research in information economics, Joseph Stiglitz, the Nobel Laureate in economics, said in a newly published paper that the information paradigm advocated by technical experts, if the government lets go, may lead to some market distortions, which will restrict welfare creation and innovation in the long run. JosephStiglitz

The fundamental reason for his claim is that the perfect information itself is impossible to achieve.

Indeed, perhaps only in a society that completely removes privacy, or in a society where everyone shares a single, collective consciousness -- like Berg in Borg (StarTrek) -- perfect information is possible.

However, the ideal state of "perfect competition" can only be achieved in a world where perfect information exists.

Such a state is naturally prone to collapse.

Motivation to hide and hold data for profit making (together with factors that are not willing to continue spending on unprofitable data retrieval) become too intense.

Information asymmetry always reestablishes its existence.

As noted by Stiglitz, this phenomenon is most reflected in financial markets, and financial markets are known for their pursuit of innovation, on the grounds that efficiency is enhanced.

In reality, increasing complexity often strengthens information asymmetry and leads to profits.

"The design tenet of many financial pactions seems to be increasing complexity and associated market forces rather than solving social problems," he said.

The consumer goods industry also showed these negative effects.

Consumers may think that with the help of ratings, ratings and testimony, their access to information on products and services has never been so smooth.

However, lack of time to study, evaluate or verify the reliability of these information means that consumers may not actually gain strength.

The more consumers rely on the third parties to represent, filter, classify, or classify these information - we trust them to save their time - the greater the scale of information asymmetry.

Information economics has determined that the most obvious example of such third parties is Google (Google) and Facebook. Only when they can make profits from the information advantage they generate can they have the motive to help us sort out the options.

This may mean using this information advantage to deal with their own customers, trying to dig more for themselves from everyone's surplus.

The current dominant position of these third parties is particularly harmful, not only for their tendency to build Internet monopolies, but also for their unique boycott of competitive subversion against ambitious rivals.

Stiglitz believes that they benefit from the privilege of accessing massive data, which is not easy to copy.

The only way to correct this is to rely on the government to intervene when data returns to individuals far beyond the rewards of society.

That means more (rather than less) regulation interventions like the European Union's anti trust agencies.