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Two historical examples of information asymmetry are the Ku Klux Klan and modern real estate agents. The Ku Klux Klan used information asymmetry such as passwords and secret handshakes to maintain an image of mystery and fear. In the 1940s, a journalist named Stetson Kennedy infiltrated the group and revealed its secrets on a popular radio program, which led to a significant drop in KKK membership. Modern real estate agents also use information asymmetry to their advantage by having access to information that the general public does not.
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A situation where one person or group has more information than another is a case of information asymmetry. The book explores this concept by looking at the Ku Klux Klan and at modern real estate agents. For over a century the KKK had been a powerful proponent of racist ideology. The group used information asymmetry such as passwords and secret handshakes to maintain an image of mystery and fear. In the 1940s a journalist called Stetson Kennedy infiltrated the group and revealed its secrets on a popular radio program. This helped to turn mystery into ridicule and KKK membership dropped dramatically.
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Author Steven Levitt, working with journalist Stephen Dubner, shows how economic theories can be used to analyze social issues. Each of the six essays...
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