Information Asymmetry

I’ve been reading Freakonomics lately. One chapter deals with information asymmetry. Information asymmetry occurs when one individual/group has more information (or better information) than another. Many occupations are buit around information asymmetry. For example, you visit the doctor because you assume that he has more or better information regarding how to diagnose and treat a condition than you do. Other occupations that immediately come to mind are real-estate agents, financial advisors, and lawyers.

Obviously, the internet has played a huge role in reducing information asymmetry. In thinking about this phenomenon, I came up with two questions:

1) Is the erosion of information asymmetry always a good thing? Freakonomics discusses how real-estate agents generally sell a person’s home for a considerable amount less than they would sell their own home, because they are more motivated by a quick sale than selling a home for an extra $10,000 (as they only pocket a small portion of the increate). With more information available to buyers and sellers, clients can now be better informed about the value of their home, thus, getting “ripped-off” less often. While this may be bad for the agent, this would seem to be a good thing. Can anyone think of an example where reduced information asymmetry is bad?

2). Are any jobs protected from reduced information asymmetry? With reduced information asymmetry there is less need for some of the people/positions that once held the informational upper-ground. Think about travel agents for a moment….There was a time when there was a great need to visit a travel agent to have them assit with planning your trips. Now, most people are using travelocity, expedia, priceline, kayak, and other websites to make their travel arrangements. When was the last time you used the services of a travel agent? When was the last time you saw a travel agency that was open and thriving?

Are all jobs at risk of the abundance of information on the internet? Immediately I thought of doctors. Surely they will always be in high demand….Then I thought about the number of times I have turned to the internet, rather than a doctor, to diagnose the symptoms of someone in our family or to decide on which medications would be best. In the past this would have required a visit to the doctor. Lawyers? Ever check out legalzoom.com or other similar sites? I think there are probably a lot of jobs that are not as at-risk - jobs that require highly specialized skills suhc as: surgeons, programmers, engineers, scientists, etc (although I can shoot some holes through these as well). If you are looking for job security, I’d suggest finding a field where your expertise cannot be quickly replaced by the internet.

Thoughts?