Overcoming asymmetric information: A data-driven approach
Giuseppe Pernagallo · Edward Elgar Publishing eBooks · 2024
The rise of artificial intelligence and information technology is changing the branches of the economics of information and knowledge, making it easier to access, screen and process massive amounts of data. Thus, technology provides formidable new tools against asymmetric information in “traditional” markets such as credit, labour, or insurance. However, there are many instances where technology itself is creating new sources of asymmetry. In many cases, data-driven approaches can mitigate the information asymmetry problem, in others it is not sufficient. I propose that the distinction between these two situations can be made by resorting to the idea of monopolies of knowledge. The purpose of this chapter is to discuss old and new problems of information asymmetry and to propose data-driven solutions, mainly based on artificial intelligence, highlighting their advantages over traditional approaches and in which cases they may not be sufficient.