Year: 2005

Better information is not always beneficial

Better information is not always beneficial.

For $795, LegalMetric LLC will tell you which judges rule most swiftly and which tend to favor patent holders. For lawyer and client, this knowledge can be very valuable. But does it increase the chances that the judge will come to a just decision?

It is the sort of information that Nobel laureate Kenneth Arrow labeled “socially useless but privately valuable.” It doesn’t help the economy produce more goods or services. It creates nothing of beauty or pleasure. It simply helps someone get a bigger slice of the pie. Sure, if the product helps win cases, then both sides will buy it — just as both sides in high-stakes product-liability cases invest in jury-selection experts and software — and neither will have an unfair advantage. But does that make the society better off?

Google Adwords algorithm

Interesting experiment to test the impact of changing the rate for Google Adwords. Two identical sites have Adwords account. One has an established account paying $0.10 per word. Another is a new account, and begins by paying $1.00, then lowers it to $0.40. The former got 15,000 click-throughs regularly. The latter started just above 15,000 and fell to 1,200 after the rate drop. Does the Adwords algorithm favours rate increases disproportionately (and hence is evil?) Or is the fact that the former site an established one create the difference?