Rogelio Bell - Management Assignment

ECON 5329

Chapter two is all about information asymmetry. Information asymmetry is when one person, or a group of people, tries to obtain control or leverage over another person or group of people, by using information that the other person or group doesn't possess. The author uses the groups, the Ku Klux Klan and real-estate agents as examples of groups that use information asymmetry.

The author gives a brief history of the Ku Klux Klan and what they have done to terrorize the nation. The Ku Klux Klan used either force or terror to deprive citizens of color the same rights and freedoms that white citizens of the United States enjoyed. They also threatened any whites who supported the rights of colored citizens. Pamphleteering, lynching, shooting, burning, castrating, pistol-whipping, and many more forms of terror where how the early Klan did most of its work. The fear that this group engineered was so ingrained in the populace that many were afraid to even speak out, because if they did they may become targets of the Klan. Various reasons prevented the Klan from becoming a major political power but their influence has always been felt in local governments.

It was rumored that the Klan had power over the police and some politicians. The fact that a lot of the information of Klan policy and rules and goings on were kept from the rank and file members allowed the upper echelons of the Klan societies to extort money and instill fear in people. John Brown and Stetson Kennedy used the Klan's secrets against them by making those secrets public. With ordinary citizens in possession of more information about the Klan's true objectives and motives, people were less inclined to support the Klan, there by greatly diminishing its power of fear over the people.

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