Asymmetric Information:
One of the major problems in specific markets (health care, real estate) is that one party knows much more than other party when doing a deal. Steven Levitt illustrates this well in Freakonomics when talking about real estate. In real estate, the cartel of realtors control information about recent local house sales; recent local house sales that inform a seller how to price their own house. Consequently, the real estate agent strongly suggests what price to market the house and his/her motive in the sale is not the same as the buyer or seller. His/her commission is not greatly affected by a large decrease in the sale price. If the house ends up selling for $20,000 less than the asking price, this means the realtor only loses $600 in commissions.
This ‘priced’ to sell motive means that for the realtor, a quick sale is more important than the price difference between the buyer and seller.
Asymmetric information plagues the market because the "MARKET" is just series of smaller markets, many of which have their own characteristics and quirks.
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