Artificial Intelligence and Asymmetric Information Theory
  When human agents come together to make decisions, it is often the case that
one human agent has more information than the other. This phenomenon is called
information asymmetry and this distorts the market. Often if one human agent
intends to manipulate a decision in its favor the human agent can signal wrong
or right information. Alternatively, one human agent can screen for information
to reduce the impact of asymmetric information on decisions. With the advent of
artificial intelligence, signaling and screening have been made easier. This
paper studies the impact of artificial intelligence on the theory of asymmetric
information. It is surmised that artificial intelligent agents reduce the
degree of information asymmetry and thus the market where these agents are
deployed become more efficient. It is also postulated that the more artificial
intelligent agents there are deployed in the market the less is the volume of
trades in the market. This is because for many trades to happen the asymmetry
of information on goods and services to be traded should exist, creating a
sense of arbitrage.
