Information Asymmetry and Online Behavior

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Questions and Answers

What is information asymmetry?

  • A type of insurance
  • A method of communication
  • A form of economic equality
  • Situation in which one party is more informed than another due to private information (correct)

Who is Stetson Kennedy?

A southern progressive who rejected the KKK.

What did the internet do to information asymmetry?

Completely disintegrated certain powers that commerce agents had.

The day a car is driven off of its lot is when it loses its value because _____

<p>the only person who might logically want to resell a brand-new car is someone who found the car to be a lemon.</p> Signup and view all the answers

What is the currency of the internet?

<p>Information.</p> Signup and view all the answers

Do doctors have the same financial incentives as other commerce agents?

<p>False (B)</p> Signup and view all the answers

Are real estate agents honest with customers?

<p>False (B)</p> Signup and view all the answers

What kind of economic relationship exists between a woman's income and dating appeal?

<p>A bell-shaped curve exists where men do not want to date low-earning women, but also get scared off by high earners.</p> Signup and view all the answers

What happened after Stetson Kennedy's actions with the KKK?

<p>Attendance at Klan meetings began to fall, as did applications for new memberships.</p> Signup and view all the answers

The Ku Klux Klan's power was largely derived from the fact that it _____

<p>hoarded information.</p> Signup and view all the answers

How did the KKK influence black Americans?

<p>Through fear via publicity of lynchings.</p> Signup and view all the answers

Did KKK lynchings become more popular as time went on?

<p>False (B)</p> Signup and view all the answers

What kind of love do men and women usually want?

<p>Men tend to want long-term relationships while women look for occasional lovers.</p> Signup and view all the answers

What word or phrase is correlated to a higher sale price of a home?

<p>Granite.</p> Signup and view all the answers

What was not a group that was persecuted by the Ku Klux Klan in the 20th century?

<p>Methodists.</p> Signup and view all the answers

What does Levitt claim was the source of the Klan's power in the 20th century?

<p>Information.</p> Signup and view all the answers

Do online daters often overstate their looks?

<p>True (A)</p> Signup and view all the answers

What did Enron do that impacted California residents?

<p>Price gouged California residents and lied about profits.</p> Signup and view all the answers

What types of websites were analyzed for user honesty?

<p>Dating websites like Match.com.</p> Signup and view all the answers

Flashcards

Information Asymmetry

A situation where one party has more or better information than another due to private knowledge.

Stetson Kennedy's Tactics

Exposed KKK's flaws by revealing secrets and portraying them as villains.

Online Dating Misrepresentation

People often lie about income or appearance on online dating sites.

Online Dating Visual Importance

Photos are crucial for attracting attention on online dating platforms.

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Real Estate Listing Clues

Certain words in real estate listings, like "granite," predict higher prices, and "fantastic" suggests lower prices.

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KKK Information Control

The KKK used fear and information control to maintain their power and influence.

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Enron's Example

Enron's fraud highlights the serious problems that result from information asymmetry in corporations.

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KKK Influence Decline

The KKK's influence decreased despite membership increases, indicating shift in societal attitudes.

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Internet Impact on Asymmetry

The internet lessened the importance of intermediaries (agents) related to informational asymmetry.

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Dating Priorities

Men and women often prioritize different factors (e.g., income or appearance) in partners.

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Real Estate Agent Incentives

Real estate agents may not be effectively motivated with high-dollar sales.

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Study Notes

Information Asymmetry

  • Defined as a situation where one party possesses more or better information than another due to private knowledge.
  • Significantly impacted by the internet, which reduced the power of commerce agents associated with asymmetry.

Stetson Kennedy

  • Southern progressive who infiltrated the KKK under the alias John S. Perkins.
  • Aimed to expose KKK's small-mindedness and ignorance, resulting in decreased attendance and membership.
  • Provided KKK secrets to Superman producers, turning the Klan into a fictional villain.
  • His efforts diminished Klan influence during the postwar era.

Online Behavior and Honesty

  • Internet acts as a major information aggregator, breaking down traditional asymmetries in various markets.
  • Online daters frequently misrepresent their income and physical attributes; many claim earnings exceeding $200,000 while actual numbers are much lower.
  • Responses to profiles are significantly lower when no photos are included, indicating visual importance in online dating.
  • Online dating dynamics show that men and women have varying priorities in partners, often based on income or appearance.

Real Estate Insights

  • Certain words in real estate listings correlate with sale prices; terms like "granite" are associated with higher values, whereas "fantastic" correlates with lower sale prices.
  • Real estate agents may not incentivize clients effectively due to minimal personal gain from higher sales.

Ku Klux Klan (KKK)

  • Derived power from hoarding information, exploiting fear within the African American community by publicizing acts of violence.
  • Klan behavior illustrates how groups can manipulate information for control.
  • The rise in popularity of the Klan was aided by D.W. Griffith's Birth of a Nation and their operational headquarters in Atlanta.
  • Ultimately, Klan lynchings declined despite an increase in membership, indicating a shift in societal dynamics and perceptions.

Other Noteworthy Points

  • Enron's fraudulent practices exemplified severe information asymmetry and its consequences in the corporate world.
  • Stetson Kennedy revealed vital KKK secrets to Pearson, impacting the group's public image.
  • Perceptions of physical traits influence dating dynamics, with certain attributes leading to social advantages or disadvantages.
  • Fear is a common tool used by experts to influence decisions and actions, paralleling techniques used by organizations like the KKK.

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