Earlier quoted context omitted.
> What's the externality that your proposed regulation is trying to internalize? The externality is the cost of staying informed. The theorems about the efficiency of a free market assume perfect information. If someone reads Consumer Reports and decides that brand XYZ is making a good product they want to buy, but brand XYZ switches to producing lower-quality products in between when the review is written and when t…
> The theorems about the efficiency of a free market assume perfect information. Huh? That comparatively freer markets make people better off in the real world is an empirical observation, and doesn't rely on theorems. (You can make a few assumptions and prove a few theorems, if you want to. But it's not essential.) > If someone reads Consumer Reports and decides that brand XYZ is making a good product they want to b…
It's not empirically true in all cases; lemon laws are broadly in the same category as what I'm advocating, and empirically make people better off.
> Eh, there's a simple fix that people intuitively implement already: trust brands more that have been around longer.
> Assume the delay between the review being written and you buying stuff is eg a quarter of a year. Then, simplified, someone who goes only for brands that have been around for at least ten years only runs at most a 1 in 40 chance of getting duped like this.
That's a lot less practical now than it used to be; the pace of innovation is higher, which is good, but has brought a lot of churn and it's hard for reviewers to keep up.