Chapter 2: The KKK and Real Estate Agents

This chapter is basically about how information can be used to its posessor's advantage. Typically the term information assymetry denotes a negative use of information for personal gain; this is usually the case. Not all of the time though. Stetson Kennedy was most definitely not trying to take down the KKK for his own personal gain. He went under cover into a dangerous situation to improve society at large. Some psycologists (and Ayn Rand) would argue that his actions were actually for himself and that his intentions were just aligned with the betterment of society, I'm not going to affirm that though. Nonetheless, such a notion puts him more in line with the real estate agents and the rest of the examples in this chapter. I don't know if that's what the authors intended by putting Kennedy's positive example with the other negative examples but it seems to make at least some sense.

What does the collection of facts in Chapter 2 mean to me? It means that knowledge is king; he (or she) who possesses the information posesses the control. That say a lot about modern society if you asked me, money and power seem to be a byproduct, even a side-effect of information. The real battle isn't over cash or command, it's over what you can learn and know that no one else can. This can be appplied to every facet of life in this world: international relations, corporate business, intrapersonal relations like romantic or otherwise, gambling, I can go on forever. I partially feel that this is sad and wish I could change it somehow but I also understand that's just how things are; this is a dog-eat-dog world.

Chapter 1: Schoolteachers and Sumo Wrestlers

I've heard people talk about this book before. The impression I was given was that it is a non-traditional view on economics. So far, I can certainly tell that it was written by economists. With all three of the examples given in chapter 1, the means by which the points were proven is statistics; an economist's favorite tool. Yes, an effective argument was given by the authors but it was done quantitatively (ahh, the cold language of economics). I wouldn't mind seeing at least some emotion in this!

Now on to the material (at least my interpretation of it) . What are the authors trying to say in this chapter? They're obviously laying the groundwork for the rest of the book: people are incentive-driven. Ultimately that means that humans will hold interest in something only if they can get something good out of it. Whether you like it or not, that's true.

The non-traditional aspect comes in with the way this point was made. No matter what, in order to gain an incentive, there will always be those who will lie (teachers), cheat (sumos) and steal (bagel-eaters) to get it. I was surprised to see just how common cheating is in sumo wrestling and test giving in Chicago. I was not surprised by the bagel example. There is always dishonesty in business. I would have expected more stealing to happen than what was recorded. Wasn't it interesting to see that the most common theives at that three-floor place were in the leadership positions? What does thay say about incentives and rewards in the business world? I guess the economist authors are actual writers as well!