Information asymmetry plays a significant role in the economic organization of industries. It refers to the situation where one party has more or better information than the other, creating an imbalance of power. This can lead to market inefficiencies, as the party with more information can exploit their knowledge to gain an advantage. For example, in the real estate industry, agents may have more information about the housing market than their clients, allowing them to manipulate the market to their advantage.
Author Steven Levitt, working with journalist Stephen Dubner, shows how economic theories can be use...
View summary