Information asymmetry and the case for arming the individual

Markets run on information asymmetry. The seller knows more about the product than the buyer, the insurer knows more about the risk pool than the insured, the platform knows more about the transaction than either party. This is not a scandal. It is the normal condition, and consumer protection law exists because of it.

What has changed is the size of the gap. For twenty years one side of every consumer interaction has had data science and the other side has had a browser tab.

What the gap looks like in practice

You negotiate a price once. The other party has priced ten million similar transactions and knows the distribution.

You read a contract for the first time. The other party wrote it, tested it, and knows which clause gets disputed.

You choose between five options. The other party knows which option most people in your situation regret.

None of this is illegal. It is simply what happens when analytical capability accumulates on one side.

Why AI could go either way

The optimistic reading is that AI closes the gap: an individual with a capable system can now analyse a contract, compare offers, and interrogate a decision in a way that previously required a professional.

The pessimistic reading is that it widens permanently. Organisations deploy AI faster, with better data, at greater scale. If individuals get consumer chatbots while institutions get bespoke systems trained on proprietary data, the asymmetry compounds.

Which one happens depends on a boring question: whether individuals end up with AI that works for them, holding their own context, or only with AI provided by the same institutions they are negotiating against.

Context is the deciding factor

A general assistant helps a little. It knows the world in general and nothing about your situation.

A system holding your actual context, your history, your documents, your prior decisions, is a different instrument. It can tell you that this offer is worse than the one you took in 2023, because it has the 2023 one.

That is why the personal data question and the AI question turn out to be the same question. Analytical capability without your context is generic advice. With your context, it is representation.

The uncomfortable requirement

Closing the gap means concentrating your own information somewhere capable of using it, which is precisely the thing everyone has been correctly warned against doing.

The only version of this that helps is one where concentrating your material does not transfer it. Your context, used on your behalf, not absorbed into a model that then serves everyone including the party on the other side of your next negotiation.

This piece revisits an earlier essay from our Medium archive: Information asymmetry (https://medium.com/prifina/information-asymmetry-an-opportunity-for-consumers-to-take-control-fc222967d7bb).