Collateral public good (was Re: [extropy-chat] Noisy future day etc..)

[Keith Henson]

At 03:01 PM 23/12/04 -0800, you wrote:
>Hal Finney wrote:
> > It is no wonder that such markets are under-provided in our society.
>
>Brett Paatsch replied:
> > Cynicism Hal?
>
>No, just economics!  It is a well known result that public goods are under
>provided in a free market.  Information markets are (impure) public goods.
>There are positive externalities in operating such a market, and there
>is no mechanism to capture the benefits which other people derive and
>use them to fund the market.

This is not entirely true.  In my odd journey through cult land into exile, 
I have come to realize that traditional economics doesn't capture a good 
fraction of human motivation.  The brain reward mechanisms evolved in the 
Stone Age and are still there.  Humans value "status" and attention (status 
is somewhat the integral of the attention you get).  There is a reason, 
status was and to a considerable extent still is deeply coupled to your 
chances of "reproductive success."

The exact same brain reward circuits are the reason we (some anyway) can be 
addicted to drugs.

>It might be possible to try to keep the results secret and available
>only to subscribers, but the amount of information is so slight, just the
>current price for each commodity, that it would be difficult to enforce
>an embargo on the data.  Plus the barriers to entry are pretty low (at
>least initially) so one could expect competition to quickly arise if the
>market's operations became profitable.  On the other hand there might
>be network effects; a well established market would have high liquidity
>that a newcomer would be hard pressed to match, like eBay does.

The people who put up the fantastic array of web pages and such incredible 
activities as Wikipedia are getting paid in attention and status among 
their peers.

But Hal has good points here where the cost to obtain information gets too 
high to be a project you can fund as a hobby.

Keith Henson