A Curious Neglect of Cicero as the First Predecessor of Asymmetric Information by the Five Nobel Laureate Economists

Abstract

In 1996, two economists, and in 2001, three economists, were jointly awarded the Nobel Prize in Economics by the Royal Academy of Sciences of Sweden for their revolutionary contributions to asymmetric information. The contribution of the first predecessor of asymmetric information was neither cited/quoted nor acknowledged by at least one of the five Nobel laureate economists in their works. This is a curious neglect of Cicero as the first predecessor of the concept of asymmetric information by the five Nobel laureate economists. Hence, Stigler's Law of Eponymy : "No scientific discovery is named after its original discoverer" (Stigler, 1980, p. 147) is also applicable to Cicero. The objectives of this article were four-fold: (a) to disclose the name of the earliest predecessor of the concept of asymmetric information : Marcus Tullius Cicero (106-43 BC), who was an ancient Roman Stoic philosopher, (b) to disclose how Cicero described the informational asymmetry between the sellers and buyers of the markets in terms of the different examples of economic exchange or transaction by "few words, with gentleness and efficiency," (c) how Cicero has elevated the discussion of asymmetric information from positive to normative or moral perspective, which can be found in his treatise, entitled, De Officiis (44 BC), whose English translation is On Duties and (d) to indicate that the concept of adverse selection, which is one of the problems of asymmetric information, was first coined by the Chicago university economist Carlos C. Closson in the article "Social selection" in 1896.