Asymmetric Information is the economic theory (developed by George Akerlof, Michael Spence, and Joseph Stiglitz) which states that in transactions, when one party has superior information than the other, an imbalance of power is created, which can eventually lead to market failures.
This condition is apparent in many instances throughout society. It occurs when you’re unsure about the quality of a used item on Craigslist or when an insurance company decides to insure an individual but is unable to determine what medical conditions he/she really has.
However, I think the most important instance of asymmetric information is the way our world runs. Everyday, crucial economic, financial, and political decisions are made all around the world and because of how integrated our world has become in this age of rapid globalization, all of those decisions end up affecting our lives in many ways. The interest rates on our college loans, the price we pay to fill up our car with gas, and the amount of money taken away from our paycheck for taxes are just a few examples of things that are decided by a few people in different corners of the globe but that have an impact on our everyday lives. These decision makers have an immense amount of knowledge on these issues while many of us idly accept the fact that we will never understand them, thus leading to asymmetric information. This is one of the reasons why most of the world’s wealth is owned by 1% of the world’s population. If more of us were more educated and informed regarding these issues, not only would we learn more about the world around us, but we would also make better decisions in our lives.
The main two reasons why the average person doesn’t take it upon himself to engage himself in this material is that he/she is either uninterested or unable to learn. This is where I come in. I’m just a 23 year old college graduate and thus I don’t claim to be a guru in all political and financial issues. However, I have studied them extensively for the last 5 years and I regularly follow these events on a daily basis. I decided to start this blog so as to help others become more educated and well-versed regarding political, financial, and technological subjects and events. After explaining the content I discuss in my writings, I will end my articles with my own opinion regarding the issues. That way, I will attempt to separate the facts from my own opinions. If you have any comments or questions, feel free to contribute. But please keep it clean. If you would like to contribute an article, please email me your writing at firstname.lastname@example.org. I’m always glad to have contributors join me on this blog. With easy to understand explanations, links to educational sites, visual aids, and with a sensible dose of humor and wit, I believe I can do my small part in attempting to overturn the status-quo, and end information asymmetry.
“We make the rules pal. The news, war, peace, famine and upheaval, the price of a paper clip. We pick that rabbit out of a hat and everyone else sits out there wondering how the hell we did it.”