Asymmetric Information

Angry Bear has a post on the economic effects of asymmetric information.
...[the] article describes how markets can go awry in the face of significant asymmetric information, primarily noting that real estate agents tend to keep their own houses (on which they pocket about 97% of any resulting increase in the sale price) on the market for longer than their clients' houses (on which they pocket only 1.5% of any increase in price from holding out longer).
Or consider these findings of a 1996 medical study: Obstetricians in areas with declining birthrates are more likely to perform cesarean section deliveries than obstetricians in growing areas – suggesting that when business is tough, doctors may try to ring up more expensive procedures.


Post a Comment

<< Home