New Institutional Economics (NIE) – a framework that focuses economic analysis on the formal and informal rules that govern economic activity – found purchase in the work of ancient economic historians around two decades ago. Within only a few years NIE came to dominate the market as it were – most clearly evidenced in The Cambridge Economic History of the Greco-Roman World, edited by W. Scheidel, I. Morris and R. Saller (see the excellent appraisal of P. Bang, JRS 99 [2009]). The reaction to NIE's presence in the field has been strong at times – with much critical and necessary pushback against the most anachronistic excesses of NIE. But in recent years the dust has begun to settle as more and more ancient historians accept that at least some of the concepts from NIE – transaction costs, bounded rationality, adverse selection, moral hazard etc. – are of great practical value for understanding the Roman economy, even if NIE's encasement in free-market ideology is concerning to some. We are not all new institutionalists now, but it is clear that NIE is here to stay.
The volume edited by Rosillo-López and García Morcillo is an exemplar of how ancient economic historians can draw upon NIE in productive ways, which also avoid many of the methodological pitfalls of the past. The editors’ introduction as well as many of the book's contributing chapters reflect on the methodological complexity of NIE as well as its previously contested presence in the sub-discipline of ancient economic history. Most helpfully, the volume maintains an impressive coherence by truly limiting its scope to studying one of the least controversial and also most widely applicable of NIE's core concepts: information asymmetry. In all societies, regardless of the structure and scale of their economies, there are disparities and inequalities in the distribution of information, and such differences have direct effects on even the most basic economic activities. The book not only avoids generating unnecessary and unhelpful controversy, but is also ultimately successful in its aim to identify and analyse information asymmetries in a range of areas, most notably Roman real estate markets, labour and aspects of trade.
The greatest strength of the book is that many contributions engage in overt discussion of the methodological context of asymmetric information – both within NIE in the abstract, but also in the applicability of asymmetric information to aspects of the Roman economy. The editors’ introduction, for example, draws upon anecdotes in literary sources – from disclosures of house hauntings to grain prices – to show that Roman elites understood that information, especially when unequally distributed, conveyed economic and social power. This accessible introduction serves both to demystify the notion of asymmetric information for those unfamiliar with NIE (or economic theory in general) and to win over sceptics who may be concerned about anachronistic applications of economics. The following chapter by P. Revilla does the necessary work of acclimatising readers to the economic jargon and concepts necessary for understanding the analytical framework of many of the chapters: perfect/imperfect information, uncertainty, risk and some of the mechanisms markets use to account for information in prices.
Still, the volume is not completely free of the kinds of conjecture or speculation that previously drew ire from sceptics concerned that NIE's concepts are prone to anti-historical over-generalisation. A. Díaz Fernández and F. Pina Polo, for example, make a highly conjectural case that the aerarium – the treasury housed in the Temple of Saturn at Rome – acted as a well-organised central archive of financial information (among other kinds of information) in the Roman Republic. The authors also speculate that Roman businessmen could and did draw upon the accounts and information in the aerarium to increase their knowledge prior to making business arrangements. The authors may be right on both counts – and I see no reason to doubt them –, but there really is no way to know (as the authors rightly acknowledge several times) due to a lack of evidence. How much does the information asymmetry framework really help us here? Could it in fact tempt historians to fill the gaps in the evidence with anachronistic assumptions about economic processes and modes of thought? Similarly, some might quibble with aspects of S. Roselaar's chapter on ager publicus and information asymmetry. Roselaar, for example, aptly describes what a free market in land might look like in theory, but then largely assumes that such conditions were in fact present in the Roman Republic along with the notion that ‘profit maximalization [sic] was very much an aim for the Roman elite in the Republican period’ (p. 93). While no one denies that Roman elites sought financial gain from their real estate holdings, this is hardly the same as ‘profit maximisation’ – the neo-classical economic notion that individual actors and/or firms will adjust their production and/or prices to obtain the highest possible profit. NIE is one of several schools of economics that tend to favour the more realistic although complex idea of ‘satisfication’ – whereby economic actors in fact typically settle for a merely satisfactory economic outcome rather than pursuing the perfect outcome that maximises profit (the concept is used in several places in P. Erdkamp et al. [edd.], Ownership and Exploitation of Land and Natural Resources in the Roman World [2015]). Such methodological problems need not undermine Roselaar's argument about ager publicus, which must indeed have had questionable legal status and economic value, creating vast gaps in information in the Roman land market. No doubt information asymmetry was in part responsible for the crises that occurred during the Gracchan period.
Information asymmetry in the real estate market is arguably the volume's central theme. Serving largely as an overview to the topic, Rosillo-López's chapter shows why the Roman real estate market was so prone to information asymmetry and the ways in which buyers, sellers, renters and even jurists ameliorated the challenges of the market. In the Roman world no two properties were exactly alike, buyers and sellers do not know the subjective values that factor into their assessments of a given property and, finally, there are various legal and social costs built into each real estate transaction. The chapter provides numerous examples of each of these factors from Roman case law and literary sources. This accessible and richly detailed chapter should be essential reading for any student or scholar of Roman real estate. Conversely, F. Lerouxel offers a small-scale case study of just two edicts from Egyptian prefects in the late first and early second century – but he uses the heuristic framework of NIE to draw a wealth of information about asymmetrical information regarding title in the Egyptian real estate market. The chapter illuminates how differences in gender, social class and legal privilege created vast disparities in information in routine transactions in Roman Egypt. Instead of putting forward sweeping and inaccurate statements about Roman rule bringing a kind of monolithic simplicity to economic institutions under its rule, Lerouxel's study shows the complex and perhaps even incoherent reality in which law was applied unevenly and often to preserve existing hierarchies.
The book's contributions tend to focus on how information asymmetries advantaged sellers over buyers, not only in the area of real estate, but also in auctions (of various goods) as well as in sales of slaves. While auctions in general have the potential to reduce information asymmetries, auctions in the Roman world, according to García Morcillo, were rife with secret agreements, collusion and other manipulative arrangements. Roman contracts and law show innovations to mitigate such illicit activities, suggesting impressive flexibility and resiliency. In diem addictio sales, for example, were used to grant the seller of a good a limited period to entertain other bids even after making a contract with a buyer. Regardless of attempts to minimise manipulation, information asymmetries persisted. The Roman slave market may have been even more fraught with forms of ‘adverse selection’ – situations in which sellers had tremendous information advantages that translate to vast disparities in market power. In the discussion of slave markets M. Lavan is one of many contributors to reference economist George Akerlof's famous 1970 paper on used car markets (QJE 84) – an article that shows how adverse selection tends to drive higher quality cars off the market. Roman slave markets, according to Lavan, must have had similar problems – as sellers were more like to keep ‘quality’ slaves (Lavan rightly emphasises that ‘quality’ is relative to slave owners’ problematic views and prejudices) and to sell slaves that were of less ‘quality’. To keep sale prices high, sellers must have been careful about the information they disclosed to buyers. As Lavan details, Roman officials sought to minimise adverse selection in slave sales as early as the time of the Second Punic War. And yet, human beings are fundamentally not commodities – an intrinsic contradiction that made slave societies, whether in ancient Rome or the antebellum American South, unable to craft rules, laws or guarantees sufficient to make slave markets function well.
Despite information asymmetries causing all manner of distortions in markets, the Roman economy also benefited from mechanisms to mitigate concomitant problems. In some cases, such benefits came almost passively. M. Flohr notes that cities were especially good at facilitating the spread of information. The beneficial effect of urbanisation was not merely due to population density, but specific kinds of urban infrastructure – fora, basilicae, shopping areas etc. – acted as conductors in the flow of information. C. Holleran focuses her chapter on signalling mechanisms that helped spread information. Credentials, apprenticeships and reference-writing were used to signal expertise in various kinds of professional labour: from construction to employment in the military. Membership in professional organisations opened up access to information for workers. Drawing upon a wealth of epigraphic evidence, N. Tran argues that collegia members used their social networks to manage information. In some cases, this management meant guarding rather than distributing information. In fact, some collegia held either officially granted or at least functional monopolies in at least a few sectors of the Roman economy, from navigation on the Tiber to several long-distance trade routes. Even if it were possible for competitors to set up grey- or black-market operations in areas dominated by collegia, it seems that the information gap must have been significant and perhaps insurmountable.
Managing Information in the Roman Economy may not be the sort of title that catches the eye of non-specialist readers, but this volume has the potential to introduce one of NIE's most practical concepts to a wider audience of students and researchers – including those who do not think of themselves as economic historians. Specialists will find the book's contents informed and engaging.
