Amazon, Authors, and Asymmetric Information

By James M. Jackson
Asymmetric information occurs any time two parties to a transaction have different levels of knowledge about a situation.
Sometimes that’s a very good thing: When I go to the doctor with bothersome symptoms, I expect her to know a lot more than I do about diagnosing the problem and how to treat the underlying issue.
Sometimes it is not a good thing: for example, when you buy a used car from a stranger, the seller knows much more about the car than the buyer does. The seller k...