As I’ve said ad nauseam on this blog and elsewhere, and quoting John Kay, the way we work out what’s good and what’s not is not by assessing it individually but by reputation. We know that Apple makes insanely great products not because we get our screwdriver out and check its specs, but because it has a reputation for doing so (and Steve Jobs has done an amazing job of making us all a little crazy about Apple, just like him).
So it’s odd that so much of our regulation to improve information flows in markets focuses on disclosure (showing us the back end of the computer) rather than on improving the way in which reputations are formed. The web is doing a marvellous job here of course and this post was provoked by the launch of a new site which is dedicated to indexing ratings websites – and perhaps rating them!
Now if we can get the itchy hands of regulators thinking less about how they can mandate disclosure which is then routinely ignored, and thinking instead about how they can improve the accuracy of reputations in the marketplace, for instance how they might be able to support ratings websites in various ways, that might help them do their job better (they have lots of challenges from defamation to verifying the identity of people making claims about others) we might be able to make more progress than we have with ‘disclosure’ regulation.