14 May 2018

Information Economics

'Information Wants to Be Expensive, Not Free! And this is Bad for Justice, Democracy, the Economy' by Dieter Zinnbauer ( (Transparency International) comments
This essay is rather speculative. I argue that there is a very much overlooked characteristic of information goods, particularly digital information goods – that leads to a substantive, yet rarely discussed market failure with far-reaching consequences for important classes of information related to our education and research system, the judiciary, markets and democracy at large. 
This overlooked feature is the positionality of many information goods. Positionality means that the utility of a specific information item for user x depends on the level of consumption of the same item by other users. Specific types of information are more valuable (or at times only valuable), when they are very exclusively available only to a small band of users. Or more intuitively, the fewer other people have a specific piece of information at a given point in time, the more valuable it may be to me.
Surprisingly, this simple characteristic is rarely discussed in the information literature or perhaps seems just too obvious to merit deeper analysis. Yet, as I will try to show, the positionality of information has far-reaching implications for the functioning of information markets and for the actual incentive systems of different players that all too often seem to be mis-construed as overly pro-social. And putting a focus on positionality also highlights the relevance and urgency for revisiting related regulatory policies, in order to ponder possible corrective interventions to tackle the ensuing informational imbalances and exclusive practices that positionality-oriented pricing structures for such information will generate.
The argument is developed as follows: The introductory chapter presents a number of quotes that are indicative of different perspectives on information dynamics and lays out the rationale for this essay. Chapter 2 briefly discusses the conventional view and analysis of market failures in information that serve as backdrop against which the argument developed here is set. Chapter 3 introduces the concept of positionality and argues for its applicability to many information markets. Chapter 4 traces the implications of informational positionality that primarily works through pricing for exclusivity across key societal institutions: research and education; the judicial system, markets and investment and finally politics and democratic decision-making.
The concept of information as positional goods offers a fresh perspective with regard to market failures and informational problems in all these areas. In addition, such a prism suggests to revisit the incentives involved and thus the overall political economy dynamics of how different stakeholders define and act upon their interests in these situations. As it turns out, commitment to openness and fair and inclusive information access may run less deep than is usually assumed. The analysis also suggests that many open government initiatives have only a limited remedial effect on these market failures. Chapter 5 develops a set of speculative conjectures about how information positionality might shape information markets in the near future – or may have already begun to do without much public notice. Finally, chapter 6 flags some ideas for possible entry points for remedies and regulatory approaches. As mentioned at the outset the line of reasoning is rather exploratory and seeks to flag specific issues and ideas for discussion and further investigation rather than exploring them in detail.