Information asymmetry is a key concept in economic theories. It refers to situations where one party in a transaction has more or better information than the other. This can create an imbalance of power in transactions, which can sometimes lead to a lack of fairness or inefficiency. For example, in the case of the Ku Klux Klan, they used information asymmetry to maintain an image of mystery and fear. Similarly, real estate agents may have more information about the housing market than their clients, giving them an advantage in negotiations.
Author Steven Levitt, working with journalist Stephen Dubner, shows how economic theories can be use...
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