Knowledge is a form of power that can easily lead to abuse. This idea is deeply discussed in Plato’s dialogue Protagoras in connection with the eloquence of the sophists. In Socrates’ eyes, the sophist, like the food merchant and seller, can deceive his customers when praising his wares (the doctrines).1 Those trading with food, insists Socrates, tend to ignore whether the product is good for the body, and because they commend all the products they sell, the purchasers remain uninformed, unless they are trained in the matter. The same lack of discrimination is attributed to the itinerant sellers of doctrines.2 The dialogue situates the rhetoric of both the sophist and the trader as strategies that are driven by similar principles of economic competition, in which advantage and profit are prioritised over cooperation and honesty. In contrast to practically applied techné , this form of unverifiable knowledge can easily generate inequality, as purchasers are prevented from accessing information that could be relevant to their decision-making.3 In this way, Plato portrays the essential problem of asymmetric information in transactions and market relationships that are not or cannot be submitted—at least in advance—to ‘fact-checking’ scrutiny or,—to borrow a term from information economics—to signalling messages and mechanisms that allow buyers to test the quality of the items or services offered by the informed party.
The issue of private or hidden knowledge is an economic concept often encapsulated by the idea ‘I know something that you don’t know’; the opposite would thus be information that is ‘publicly observable’. Informational asymmetry is not only a frequent phenomenon in market activities, but is a distinguishing trait of human relationships, and can be identified in numerous parts of our daily life. As Plato shows, the study of this idea—ancient and modern—requires a more complex understanding of the social and cultural structures that influence human behaviour. To what extent should the bearer of relevant information—seller or trader—reveal it to the other party? How can profit coexist alongside good faith and the moral obligation to share knowledge? These generic ethical considerations lead us to the fundamental question of how information is acknowledged and managed by the parties involved in such exchanges. In ancient Rome, philosophical treatises such as Cicero’s On Duties (De Officiis) and Seneca’s On Benefits (De Beneficiis) discussed these issues in relation to economic matters and behaviour, providing answers that matched the social and collective codes and concerns rather than the legal requirements and enforcement norms.
Seneca’s Letters to Lucilius specifically address the problem of those who transformed the old virtue of wisdom into an obscure and skilful science to exclusively serve their purposes.4 One of the consequences of such an instrumentalisation of knowledge is a restricted access to information. In his defence of the transparency of the Stoic doctrines, Seneca resorts to the useful comparison between the philosopher and the seller (as did Plato), and pictures a hypothetical scene in a retail shop: “we have nothing that catches the eye (ocliferia), we do not deceive the purchaser; what he will find inside is nothing more than what is exhibited outside (in fronte suspensa): we allow the people themselves to select the exemplar from anywhere they wish (ipsis permittimus unde velint sumere exemplar)”.5 The marketplace features again as a didactical example of Seneca’s battle of discreditation against those who twist or obscure the truth: “when you buy a horse you order to remove its blanket, you pull off the cloths of the slaves for sale (detrahis vestimenta venalibus) so that no defects of the body remain out of sight (ne qua vitia corporis lateant): how can you evaluate a man that is covered (hominem involutum aestimas)?” The philosopher’s reasoning specifically refers to the pimping tactics of slave-dealers (mangones), and how their use of ornaments raises the suspicion of purchasers, who should thus demand that any clothed parts be removed from the slave’s body.6 These ethical considerations about issues that concern a lack of honesty and transparency, but also about the need to act proactively in the search of truth (and knowledge), are not by chance discussed by Seneca using examples from everyday life in which asymmetric information enables licit profit yet also opens the door to dubious and fraudulent behaviour. These concerns ultimately reflected situations in which all members of society were or had been involved, whether directly or indirectly. Responses by public authorities included specific regulations (such as the edict of the curule aediles), which introduced mechanisms to make the seller liable for any undeclared vice of the merchandise. Other public and private enforcement instruments and forms of information management, such as encoded systems of commercial advertising, contracts, public records of transactions, taxes and market structures, to a certain degree compensated for the essential problems of uncertainty. They also functioned as a counterbalance to the unequal access to information that generated business opportunities, yet also disadvantaged economic actors, and were essentially a source of transaction costs.
One economic sector that was particularly affected by this disparity in the management of information was the real estate market. A famous anecdote narrated in a letter from Pliny the Younger reveals the story of a large house situated in Roman Athens, which was either put up for sale or let by the owners. However, the advertisement omitted an important defect: the house had been haunted by a ghost that made the place uninhabitable. Regardless of the veracity of the story, Pliny reveals the important detail that the owners hoped someone who was ignorant of the disturbing circumstances would accept the offer. Someone did, in fact: the Stoic philosopher Athenodorus became intrigued by the suspiciously low price of the house and accepted the offer. Led by his curiosity concerning the mystery of the deserted house, he encountered the ghost and helped him to make peace with the spirit that had caused the problem.7 Aside from the fame of the passage (which is often evoked as the earliest documented ghost story), Pliny reveals a typically speculative performance of sellers in the sector, as well as the function of prices as signals of irregularities or uncommon circumstances. The anecdote also shows, similar to the Senecan examples discussed above (which are also framed by Stoic doctrines), how knowledge of price behaviour within a specific market, as well as a proactive attitude by the uninformed party to test the data provided by the informed one, can to a certain extent compensate for the problem of uncertainty. Athenodorus’ awareness of the average prices of houses in Athens during the Augustan age was not an extraordinary circumstance.
The alteration of prices in other sectors also drew the attention of Pliny the Elder. In his attempt to explain the variability of market prices (pretia rerum) of certain commodities in Rome and other places almost every year, Pliny provides a valuable reasoning that points to the effects of “shipping costs or the terms on which a particular merchant has bought them, or at some dealer dominating the market may whip up the selling price”.8 One of these dealers, a certain Demetrius, appears to have provoked a large scandal in the Seplasia, a commercial street in Capua known for its specialised market in expensive aromatic products, and for this reason was prosecuted under Nero. Pliny’s proposal to mitigate this problem was to provide a list of prices that were usual in Rome (poni tamen necessarium fuit quae plerumque errant Romae) and thus establish a standard value (ut exprimeretur auctoritas rerum) that could be used as a reference for all actors involved in the business, including ignorant purchasers. In this regard, Pliny also notes that purchasers who pay exaggerated prices for dye should know that the cost of its production changes according to the season of the shellfish harvest, and its consequently variable supply.9 Pliny’s proposal to fix scales of prices and explain the mechanisms of transaction costs to battle speculation followed t...