Instant Information Devaluation


Information cost is a fickle animal. Ironically, information has the most value right before it’s made available to a person. This value isn’t always in the pure financial sense, but also includes the time spent to gain that information. However, as soon as the transfer of information occurs, that attained information by itself has zero value to the new owner. So then what’s the point of gaining new information?

Arbitrage. The owner of newly attained information can play knowledge arbitrage and sell it off to whomever they wish. A great example of where this happens in everyday life are movie critics. They have spent the time gaining information about a movie before it’s released. Because of that artificial “pre-release” barrier, they have become the holder of information that the rest of us don’t have access to. Bigger than that, the critic is providing us a condensed version of an experience, which would normally take two hours or so. Based on that, we decide whether the movie’s value is higher than its opportunity cost options. But, after you have seen the movie that review has little to no value because you have gained the same information as the critic, and often have an opinion of their review.

Another thing about information is that it lives perfectly in the realm of asymmetry. The only time one is looking for information is when they don’t have it and have a percieved or real need for it. To attain it, that person refers to someone who has it. That holder of information is only valuable to the information seeker as long as that imbalance is still present. I was watching Silence of The Lambs last night, and noticed how Clarice put herself on the line to gain unique information from Hannibal Lecter. Being the genius he is, Hannibal used his asymmetrical knowledge of criminal profiling to gain what he perceived valuable and learn what he could from Clarice during their game of “quid pro quo”.

Just like everything else, information does not have any intrinsic value. However, the value of information is greatly susceptible to diminishing marginal utility, but not from the amount of information owned. This decreasing marginal value comes from the disparity of who possesses it and its age. If one can take advantage of the inequality of information for their own gains, the information has value through its application.

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One Comment

  1. Maxwell
    Posted May 27, 2008 at 10:30 AM | Permalink

    Good article.

    I did find that the value of the information to me was at zero by the time I reached the end of the article (proving your article to be true).

One Trackback

  • […] we now have the ability to get at that information from where we choose. As we learned from Instant Information Devaluation, the value of newly attained information plummets as soon as it is attained. With Google and […]

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