Financial Times columnist warns AI could make some markets less efficient

In short: A Financial Times columnist says AI might make some markets work worse, even if it helps people do tasks faster.

What's going on

AI systems can produce and process information quickly, which usually sounds helpful. In an opinion column, Martin Sandbu argues that cheaper information does not always mean markets, meaning places where people buy, sell, and get matched for jobs, will run more smoothly.

He uses a classic economics idea called the “market for lemons” (lemons means bad used cars, not the fruit). If sellers know a car is good but buyers cannot tell, buyers offer a low price to protect themselves. That can push good cars out of the market. Sandbu says AI could help here by helping buyers check quality more easily.

But he says AI can also break “signals,” which are clues people use to judge quality when they cannot see it directly. A university degree is one such signal for employers. If students can use large language models (LLMs, chatbots that write and summarize text) to make their work look equally strong, degrees may tell employers less about a person’s skills.

He also points to “search” problems in areas like hiring and dating. If AI makes it easy for everyone to write perfect applications and profiles, more people will send more of them. That can flood the system, like adding more cars to a traffic jam, and force everyone else to spend more time sorting through the pile.

What to watch

If AI makes traditional signals less useful, employers and platforms may look for new ways to judge people, such as tests, trials, or verified work samples. The bigger question is whether these replacements reduce wasted effort, or simply move the burden elsewhere.

Source: Financial Times