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.
Author Steven Levitt, working with journalist Stephen Dubner, shows how economic theories can be use...
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