Information Asymmetry

Information Asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance of power in transactions which can sometimes cause the transactions to go awry, a kind of market failure in the worst case. Examples of this problem are adverse selection, moral hazard, and information monopoly.”

our migration towards being information workers makes information asymmetry an increasingly relevant lens to view system dynamics.

Information asymmetry causes misinforming and is essential in every communication process. Examples of two information asymmetry models: (1) When people at high risk are more likely to buy insurance. (2) people behave more recklessly after being insured.

“Information asymmetry within societies can be created and maintained in several ways. Firstly, media outlets, due to their ownership structure or political influences, may fail to disseminate certain viewpoints or engage in propaganda campaigns. Furthermore, an educational system relying on substantial tuition fees can generate information imbalances between the poor and the affluent. Imbalances can also be fortified by certain organizational and legal measures, such as document classification procedures or non-disclosure clauses. Exclusive information networks that are operational around the world further contribute to the asymmetry. Lastly, mass surveillance helps the political and industrial leaders to amass large volumes of information, which is typically not shared with the rest of the society.”

Organizations in power who are increasingly becoming informed of the dynamics in society are carrying with them emergent ethical responsibilities.

“…The level of policy in a democracy cannot rise above the average level of understanding of the population. In a democracy, the distribution of knowledge is as important as the distribution of wealth.” (Daly, Herman, Farley, Ecological Economics)

The financial motives behind digital identities and the academic promises of wikinomics have idolized transparency, thus overshadowing the threats it poses. Full transparency is an ideology.

The Challenge: increase interoperability of data for social good

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