Imperfect Information: The Unavoidable Paradox

The Impossible Ideal versus A Realm of Possibilities

In theory, a world of perfect information, of information that completely eliminates uncertainty in decision-making processes, sounds ideal. Imagine a universal state of complete knowledge, perfectly competitive markets, rational actions, and constantly updating information. Sadly, we must resign ourselves to merely dreaming up such a scenario because in practice, the assumption of perfect information is unlikely to be correct for real world situations. Rather, in the context of everyday life, it is imperfect information—information that only reduces uncertainty but does not eliminate it—that is the norm. For seemingly obvious reasons, this fact is often lamented as creating a permanently flawed world, a world in which the theoretical and practical values of increased information become meaningless.  Likewise, attempts to stimulate rational dialogue through the expansion of information have been enthusiastically applauded by a broad range of groups and individuals, including scholars of economics, law and public policy.

Perfection within imperfection? It may be a difficult idea to grapple with but one we must address.

But are there times when we might prefer people to be less informed? Can advantages flow from the structure of some political institutions that limit political information? How can we benefit from a society in which imperfect information is and will continue to be a widespread phenomenon? While my purpose in exploring these questions is not to become a champion of ignorance, I do feel it necessary to challenge the conventional wisdom that imperfect information is always and without question a “bad” thing.

Most readers of this piece will probably be advocates for the autonomy of individual choice, an idea that stems from a belief in the importance of the individual and the virtues of self-reliance and personal independence. They will therefore be quick and correct to point outsome of the more serious pitfalls associated with imperfect information. Naturally, an individual’s personal preferences and hisher ability to locate avenues for pursuing them are dependent upon the availability of information, often a public good (an item freely availably to the public without the possibility of exclusion) and consequently subject to free-rider problems and suboptimal production. (“Free riders” are, by definition, those consume a disproportionate share of a public resource or do not contribute enough to its production.)

While this perspective on imperfect information is often applied to economic markets and commercial transactions, it can also be extended to the public sphere in order to better understand the general problems of political organization and the unfair advantages enjoyed by certain groups in influencing public policy. Differential access to information among competing groups—some within a coherent and well-informed “power elite” and others whose lack of money, resources and organizational techniques places them outside this privileged group—disadvantages large segmentsof society. In other words, because certain special interest groups can afford access to information in a public context and thereby better identify their interests and use governmental intervention to promote these interests while others simply cannot, narrow groups become undeniably favored within our society, even if their members do not “care” about issues as much as their politically impaired counterparts.[1]

After this brief discussion of the social harms inherent in imperfect information, it is indeed disheartening to say that suboptimal information is probably destined to remain a fact of life. Perfection is, after all, an ideal rarely achieved. Assuming, for now, that this is true, should we not consider the ways in which suboptimal information might work to our collective advantage? Without necessarily embracing the phenomenon of imperfect information, should we not explore how to use it as a means to beneficial ends? Intuitively, it seems that more information would lead to more rational decision-making. However, a diverse body of literature from philosophy, organization theory, and social psychology suggests otherwise. In situations of uncertainty[2], decision-makers are frequently aided by “heuristic devices”- an abstract concept or model useful for thinking about social and physical phenomena. For example, anthropologists subscribe to the methodological and heuristic principles of Boas and his students in their research. While such devices are valuable to those seeking to explain the world around them using well-established theories and ideas, they also affect the use of information in two critical ways. First, a heuristic device synthesizes complex information into a simplified analytical framework, possibly undermining the core meaning of the information in the process. Second, with the goal of facilitating effective comprehensive analysis, a heuristic device also excludes some information. In the words of Christopher Schroeder, “comprehensive rationality…reduces choice to an analysis of the efficacy of available alternatives to achieve predetermined goals…inevitably entail[ing] simplification, both in the specification of goals and in the modeling methods employed to predict the extent to which alternatives achieve them.”[3]

Party Politics: Limited Information in Action

So in more concrete terms, how does this relate to the ideal of perfect information? Consider political parties, one of the most important tools of national political organization. While the praise for political parties’ ability to disseminate messages broadly to the public is not unjustified, their power and influence is also derived from an implicit reduction in the number of public communications about political actors, programs and policies. As observed by a number of authors, the reason for this is that political parties seek to concentrate the public’s attention on a visible cue—party identification—which is intended to simplify an admittedly vast amount of information about individual candidates and, in order that it will be understood and followed, to overshadow and dwarf the static of individual political communications.[4] Voters perpetuate this pattern by using political parties as guides, as symbolic shortcuts through a wealth of sometimes-complex political information.

Party leaders from all points on the spectrum intentionally constrict access to information a means of maintaining power.

By drawing connections between issues, programs and interests that may not otherwise be apparent in the din of diverse, decentralized individual political conversation, party forces create heuristic devices that serve to elucidate and necessarily reduce the amount of political information available. This reality, along with people’s instinctive need to break down information in order to understand it, suggests that an increase in the diversity of political inputs (essentially, enhanced information) will not necessarily lead to a more enlightened public since political parties will continue to filter that input and thereby promote better comprehension, especially among the less educated and poor. In response to the seemingly commonsensical proposal that we simply eliminate political parties, we must consider that people may well generate their own types of anchoring devices, which could be worse than the heuristic devices now provided by a sense of party identification. In the end, political parties simplify political dialogue between the government and public (and therefore enhance governmental accountability to retrospective evaluations by the public), make the meaning of electoral events more clear, and serve as a structure that frames issues and programs in intelligible terms for the public as a whole.

In essence, stronger party identification coupled with less information can actually benefit utilitarian decision-making by obscuring contentious political divisions and thereby facilitating agreement and political action. Why should this fact be cast in a positive light? Because agreement is a prerequisite to overcoming the status quo. To paraphrase John Rawls, if we are ever to achieve social cooperation (on issues such as healthcare, welfare reform, education initiatives, etc.) in an environment of pervasive uncertainty and widely different self-understandings and conceptions of personal fulfillment, it is necessary to avoid certain issues.[5] Through a more focused political process (which necessitates ignorance of some issues and selective convergence on others), popular choices become aggregated, tied to a broader program, and finally culminate in compromise rather than veto as the general form of resolution. Action rather than more delays.

Of course, such obfuscation can be said to undermine the “electoral connection”—the responsiveness of political representatives to the instrumental needs and desires of their constituents—and to prevent the development of an effective rational dialogue in which decision-makers are forced to confront and deal with the challenges associated with an abundance of information. Indeed, civic virtue scholars suggest that greater information will not cause stalemate because discussion will promote a convergence of views on social principles. They argue that this is because justifications would have to be proffered in terms of general normative ideals and not narrow utilitarian benefit.[6] But is the average person so logical and cooperative? Is he willing to adjust his demands when placed in a complicated discussion involving both a plethora of sometimes abstruse information and a range of conflicting opinions about said information? Is he willing to sacrifice some personal gain for the sake of reaching a consensus about information that he at times cannot even penetrate? If he is not, then the thesis of the civic virtue scholars falls apart.

The “Veil of Ignorance”: A Grown Up’s Game of Pretend

 

 

 

A literal veil to represent a figurative practice.

Our discussion has thus far focused on the benefits of controlled information to building political consensus and enhancing rational thought processes. Now, using John Rawls’s philosophy of justice and his concept of the “veil of ignorance”, we will further examine how decision-making could be improved and dialogue promoted by excising information, by disembodying individuals from knowledge of their society. In short, the veil of ignorance is a method for distinguishing between just and unjust social customs. Its criterion is as follows: A rule is just if everyone would agree to it given that they were made ignorant of their position in society. That is, a just society is formed when people remove themselves from everyday day and pretend that their position in the future, in the new society they are trying to create is uncertain.[7] For instance, you may be a high-powered white heterosexual bank CEO now but according to the veil of ignorance, you must make policy decisions under the assumption that in the new society, you might be a black homosexual food prep worker. Obviously, this requires a conscious dismissal of a wealth of information pertaining to both the plausible and likely. Nonetheless, if successful, this method guarantees the removal of personal biases from important decision-making processes.

There are, of course, both theoretical and practical problems associated with this particular device, but it is no less worth contemplating for reasons that will be expounded upon shortly. Under most circumstances, establishing a true veil of ignorance in the real world may be virtually impossible. However, it can be done, at least to a certain extent. For example, partial veils of ignorance can be established in public decision-making through any technique that introduces a structural impediment to the clear identification of the ultimate winners and losers in a public decision. Such impediments may arise as a result of ambiguity about how rules will be applied, who will enforce rules, how rules will be enforced, and the length of time rules will be in place. When decision-making is delegated to administrative agencies within the bureaucracy, for example, the process can travel through so many different people and levels within the bureaucratic hierarchy that the incidence of costs and benefits associated with a given policy option are ultimately rendered totally unclear. This can actually help to forge a political consensus and overcome the advantages of special interest groups by making it more difficult to know what side of an issue a given member of any group should support.

Functioning two-party systems can also be quite successful in acting as veils of ignorance. For much of the past one hundred years, the American political system has been heavily influenced by two political parties with which we are all familiar: the Republican Party and the Democratic Party. The environment used to be such that when one party was dominant for a brief period, it was usually able to control all branches of government. As such, individual politicians and political parties did not ordinarily envision their interests as necessarily linked to the power of any one institution and therefore did not attempt to concentrate power in any one institution since they might later be excluded from that very power center through the electoral processes that are by now quite well known to us. A veil of ignorance, uncertainty about the future, a need to cooperate were established. Since the late 1960s/early 1970s, however, things have changed. With the exception of the present day, no party has recently been able to dominate both branches simultaneously. With the Democratic Party now usually having greater control over the legislative branch and the Republican Party over the presidency, a collective mentality has formed that this pattern will persist in the long run. Democrats now widely assume that nothing can undo their prominence in the legislature and Republicans generally believe that their long-term control over the presidency is assured, ensuring that political interests are now envisioned as being tied to specific institutions. The future is far more certain than it once was and political concurrence has been compromised.

Letting Go of Preconceived Notions: As Impossible as Perfection?

It is, of course, a mental challenge to relinquish the idea that greater, if not perfect, information is the answer to all our problems. After all, it has long been lauded as our only hope for stimulating thoughtful dialogue and promoting more responsible and efficient government. Nevertheless, the paradox highlighted by this article deserves our attention. Indeed, in some contexts, the benefits of limited information cannot be denied. In the past, for instance, the shaping and narrowing of political parties and party identification has in some respects improved the ability of the public to understand, agree upon, and control political events. The accountability of individual political representatives to group activities through party identification has also reigned in the influence of interest groups. Contrarily, the erosion of parties and party identification has allowed individual political actors to accumulate power in their respective districts. This situation adversely affects the allocation of resources since a politician whose continued clout is dependent upon a certain district will naturally become primarily concerned with getting that district the resources it requires to the detriment of others.

What with enhanced information being so strongly associated in our minds with social progress, it is unlikely that anyone will begin actively advocating for the restructuring of institutions such that the dissemination of information becomes even more restricted. Nonetheless, it is worth presenting the idea that limited information can further governmental and social consensus and innovation, especially since this phenomenon is likely to persist for a long time.


[1] George J. Stigler, “The theory of economic regulation,” The Bell Journal of Economics and Management Science, vol. 2, no. 1 (Spring 1971), pp. 3-21, http://www.jstor.org/stable/3003160.

[2] Ed. Daniel Kahneman, Paul Slovic and Amos Tversky, Judgment under uncertainty: Heuristics and biases, Cambridge University Press, 1982.

[3] Christopher H. Schroeder, “Rights Against Risks,” Columbia Law Review, vol. 86, no. 3 (April 1986), pp. 495-562, http://www.jstor.org/stable/1122636.

[4] S. Popkin, J.W. Gorman, C Phillips and J.A. Smith, “What have you done for me lately? Toward and investment theory of voting,” American Political Science Review, vol. 70 (September 1976), pp. 779-780.

[5] John Rawls, “The Idea of an Overlapping Consensus,” Oxford Journal of Legal Studies, vol. 7, no. 1 (Spring 1987), pp. 1-25, http://www.jstor.org/stable/764257.

[6] Kenneth A. Shepsle, “The Strategy of Ambiguity: Uncertainty and Electoral Competition,” The American Political Science Review, vol. 66, no. 2 (June 1972), pp. 555-568, http://www.jstor.org/stable/1957799.

[7] John Rawls, “Justice as Fairness: Political Not Metaphysical,” Philosophy and Public Affairs, vol. 14, no. 3 (Summer 1985), pp. 223-225, http://links.jstor.org/stable/ 2265349.