INFORMATION WANTS TO BE FREE:
The end of the rip-off economy: From finance and medicine to used cars, artificial intelligence is radically improving market efficiency (The Econmist, 10/27/25)
IF YOU KNOW how to use artificial intelligence, it can save you a lot of time and money. Leasing a new car? Be sure to upload a photograph of the contract to ChatGPT first. Need help with a leaky tap? AI often understands the issue—and at a lower cost than a handyman. Parents with a fussy baby can now use chatbots to answer questions in seconds, rather than waiting for a doctor’s appointment. Giving Claude a PDF of a wine list is a great way to find the best-value bottles.
These examples add up to something bigger. As AI goes mainstream, it will remove one of the most enduring distortions in modern capitalism: the information advantages that sellers, service providers and intermediaries enjoy over consumers. When everyone has a genius in their pocket, they will be less vulnerable to mis-selling—benefiting them and improving overall economic efficiency. The “rip-off economy”, in which firms profit from opacity, confusion or inertia, is meeting its match.
Information advantages have existed for as long as markets themselves. In medieval England grocers used fake scales to dupe customers; pub landlords put salt in beer to make patrons thirstier. Such squalid practices are not just annoying. In a paper published in 1970, George Akerlof, a Nobel-prizewinning economist, discussed the market for used cars. It is hard for a buyer to know if such a car works properly or is a “lemon” with hidden problems. Buyers thus assume the worst. As a result, honest brokers, worried about being suspected of exploitative behaviour, stay away. The quality of service declines. Fewer consumers fulfil their needs.
The internet has made it harder to screw over customers. With Carfax and other providers of vehicle data, customers can check the history of a vehicle, overcoming some of the problems identified by Mr Akerlof. Taxi drivers now struggle to take people on circuitous but profitable routes, since apps such as Lyft and Uber tell them exactly where to go. Tripadvisor, a reviews website, sends tourists to restaurants that will provide a decent meal. In the early 2000s there were more than 20 branches of Angus and Aberdeen Steak Houses, a notorious tourist trap, in London. Today there are four, and the ones that remain are better than before.
Efficiency is deflationary.