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Indiana has lost a superstar. Bill Oesterle passed away, as reported last week in this newspaper and elsewhere. Bill earned an honors undergraduate economics degree from Purdue and a Harvard MBA. In February 2022, Bill spoke to the student-led Ball State Economics Club. Bill gave us an inside view into the growth, challenges and ultimate triumph of Angie’s List (now called Angi), the company he co-founded. He told us it was really all about economics.
Along with our colleague Michael Hicks, we also engaged in some friendly and productive sparring over approaches to economic development. Bill planned to visit with Ball State students and faculty again this past March, but unfortunately, his health did not allow it.
So how was the history of Angie’s List all about economics? Information is central to the operation of an economy. Freely determined prices are both based on information and loaded with information. However, prices can never signal all the information necessary to promote efficient resource allocation. Nonprice factors also come into play.
One of the realities of any economy is asymmetric information. Asymmetric information is a fancy way of saying that, in certain market transactions, one side of a market knows more than the other. The side that knows more about a product’s or service’s quality/attributes can take advantage of the other side. The shady home repairman or used-car dealer comes to mind.
Alhough both common and statutory law provide some relief, the seller’s reputational capital is also a powerful remedy to the problem. And there can be markets for information. What if a consumer could find a reliable source of information on potential service providers?
While academics like Bohanon, Horowitz and Hicks talk about the issue, Bill Oesterle did something about it by, in effect, perfecting a market for reliable information. Of course, there were challenges along the way. How will this business get consumers to share information? How will they protect sellers from unfair and vicious allegations? And how will such an enterprise generate enough revenue to cover its costs and reward its investors? But those were precisely the problems Bill liked to wrangle with and solve.
His enthusiasm, good cheer and relentless spirit were as much a lesson to us all as were his words. Thank you, Bill, for your insights, inspiration and your life well lived. Rest in peace, good friend.•
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Bohanon and Horowitz are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.
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