Information Asymmetry and the Digital Guerrilla

When an individual clicks a checkbox to acknowledge reading a 120 page user agreement that was never even looked at just so they can download an app, they put themselves at a disadvantage. Or whenever a salesperson rushes you through the signing of dozens of documents without allowing you time to read then. In each of these scenarios, neither of which is uncommon, the other side attempts to lock you into a situation in which they take away your ability to respond if they do something wrong.

In the above mentioned cases, and many others, the more powerful actor is attempting to create an instance of information asymmetry. Information asymmetry occurs when one party in a transaction has more or better information than the other party. In any transaction wherein information is power, to lack vital information puts the weaker party at a distinct disadvantage, and necessarily creates an instance of power asymmetry. Where information is power, to lack information is tantamount to powerlessness.

The 2001 Nobel Prize in Economics went to Joseph E. Stiglitz, George Akerlof, and Michael Spence, “for their analyses of markets with asymmetric information.” Stiglitz wrote about screening which is the process a less informed party uses to cull information from the better informed party. Akerlof wrote about adverse selection wherein a seller who has better information about a product than his pool of buyers is therefore able to push inferior products onto buyers. Spence, who wrote about signaling, argued that individuals could take actions which inform others of their qualifications or abilities.

Now what does the 2001 Nobel Prize in Economics have to do with digital activism? Plenty! I got the notion of asymmetrical power relationships from the idea of asymmetrical information. Further, these economic terms can be used to analyze non-economic circumstances. Over the next several posts, I am going to explore how these ideas borrowed from economics can help us to understand how the system uses information warfare against us.

4 comments

  1. […] have spent a lot of time thinking and writing about information asymmetries and adverse selection lately. More than once I have wondered if I was on a tangent. There have been […]

  2. […] have touched on this idea, briefly, before. In that post I noted that clicking a checkbox acknowledging that you read a 120 page legal […]

  3. […] about the standard form contracts not being read (point 1) on a couple of occasions (here and here). I have found further commentary on the phenomena via the web; Seth Stevenson of Slate gives a […]

  4. […] back in 2013 I rediscovered the concept of information asymmetries. I knew then that this would be an important topic going forward. At the time I was particularly […]

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