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via FT's Free Lunch.
Nobel Laureate George Arkerlof's paper on "The Market for Lemons"
It was a pioneering analysis of how markets fail to achieve efficient transactions when consumers have worse information about the product than the sellers. In the used-car example, because some unscrupulous used-car traders try to pass off “lemons” as “peaches”, consumers are aware that not all cars are what they seem to be, and discount the value they are willing to put even on the cars of perfectly respectable sellers. Because it is hard to distinguish lemons and peaches in the dealership yard, all used cars are tarnished by this risk.
I talked about this in my Introduction to Economics class, on a simple example of inefficient markets. Interestingly, you can think of #misinformation along the same lines, as a marketplace of ideas, as well as recent riots:
These provocations are, therefore, of a piece with social media propaganda campaigns that spread misinformation. Again, trust is the casualty: the effect of misinformation is not so much to spread false beliefs as to eliminate confidence in truthful ones. As the title of a book by Peter Pomerantsev captures so well, the outcome is that “nothing is true and everything is possible”.
We should understand the effect of agents provocateurs in America’s equal justice protests in the same way. The effect of seeding vandalism and rioting amid the protests is to make it hard to distinguish legitimately angry but peaceful protesters from violent mobs. As a result all are tarred with the same brush.