What Arrow’s Information Paradox Says (to Philosophers)

Abstract

Arrow’s information paradox features the most radical kind of information asymmetry by diagnosing an inherent conflict between two parties inclined to exchange information. In this paper, we argue that this paradox is more richly textured than generally supposed by current economic discussion on it and that its meaning encroaches on philosophy. In particular, we uncovers the ‘epistemic’ and more genuine version of the paradox, which looms on our cognitive lives like a sort of tax on curiosity. Finally, we sketch the relation between Arrow’s information paradox and the notion of zero-knowledge proofs in cryptography: roughly speaking, zero-knowledge proofs are protocols that enable a prover to convince a verifier that a statement is true, without conveying any additional information.