Wednesday, August 19, 2009

Theft and Information Asymmetry

Even burglars try to solve information asymmetry problems. You know whether your house has valuable contents, but the burglars don't. And, obviously they would prefer to rob houses with more valuable contents. Some signals they look for: flowers outside your house indicate you have taste and taste means you are more likely to have nice possessions; toys in the yard signal the possibility of valuable gaming systems inside. And, they also obviously look for signals that the house is a soft target.

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