Information asymmetry plays a significant role in market efficiency. It refers to a situation where one party has more or better information than the other, creating an imbalance of power. This can lead to market inefficiency as the party with more information can exploit the situation to their advantage. For instance, in the case of the Ku Klux Klan, they used information asymmetry to maintain an image of mystery and fear. Similarly, real estate agents can use their knowledge to their advantage, potentially leading to market inefficiency.
Author Steven Levitt, working with journalist Stephen Dubner, shows how economic theories can be use...
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