Biased Advice

The modern capitalist society, characterized by decentralized decision making and increasingly sophisticated products and services, turns on relationships of epistemic reliance, where laypersons depend upon advisors to guide their most important decisions. Yet many of those advisors lack real expertise and many are biased by conflicting interests. In such situations, laypersons are likely to make suboptimal decisions that sometimes aggregate into systematic failures, from soaring health care costs to market crashes. In the end, the presence of an unbiased advisor is the strongest determinant of layperson performance, and thus policymakers must develop ways of aligning the interests of advisors and laypersons. Pay-for-performance, blinding of experts, and mandatory or subsidized second-opinion policies are likely to be helpful in aligning these interests

Biased Advice

The modern capitalist society, characterized by decentralized decision making and increasingly sophisticated products and services, turns on relationships of epistemic reliance, where laypersons depend upon advisors to guide their most important decisions. Yet many of those advisors lack real expertise and many are biased by conflicting interests. In such situations, laypersons are likely to make suboptimal decisions that sometimes aggregate into systematic failures, from soaring health care costs to market crashes. In the end, the presence of an unbiased advisor is the strongest determinant of layperson performance, and thus policymakers must develop ways of aligning the interests of advisors and laypersons. Pay-for-performance, blinding of experts, and mandatory or subsidized second-opinion policies are likely to be helpful in aligning these interests