How is Ku Klux Klan like a group of Real estate agents?

Analysis

Information of any form is an important part of awareness. There are always two parties
involved in a business of passing knowledge; the effect and the cause. And in economics
too, the comparison is mostly done on the grounds of two parties being involved. Levitt
in this chapter, Chapter 2, focuses on the impact of fear caused due to lack of information
on one party, could be known as 'Information Asymmetry'.

Chapter begins with the introduction of the Ku Klux Klan, its establishment as a prank
between people of similar thoughts which led to violent acts committed after its
reorganization as a multi state terrorist organization where they encouraged
discriminatory activities against anyone except white Christian men. Although these facts
help us understand the real expedition behind the infamous cult of KuKluxKlan, Levitt
here tries to show a different picture of them after the world war two, during 40s.

KKK was widely famous for its vicious acts against slaves and other minorities but
during the Second World War the Klan was entirely operating on appeal to fear. , The
Klan itself was indentified on what it could do and what it had done, providing fear even
though they were not acting any violence in reality at that particular time. Here, we can
see the two parties the Klan members and other normal people having an information
asymmetry. Meaning that the fear that intrigued normal people is what kept the Klan
running during that time.

After the war, however, the Klan did give their verdict of existence by burning 300 foot
cross on the face of Stone Mountain claiming "they were back on the market", soon to be
cut loose by Stetson Kennedy, who is widely remembered for what he did to create a
knowledgeable expansion of the Klan. He engaged in the Klan and helped to infiltrate the
Klan and in time with his contributions the Klan was remained as a joke. The members of
the Klan left and the rate at which people were being involved also decreased crating the
fact that when people know the story from both sides chances are, they already have
identified the culprit.

Making out of this instance is that with introduction of internet and the website where
people were able to compare prices on insurance policy it was a lot easier for consumers
to choose the best platform creating an extension of price level demographic facilitating
the patrons who knew less of insurance company's price policy.
Like the change of people's perception on general matters once they knew the required
information, the entire scale of equilibrium changed. In real estate the agents play the
same game. The agents have in hand information about the prices of the house around the
neighborhood and also they know what sort of price range you want. The idea is when
the seeling of house though an agent seems much more convenient given that, they know
the market well and they also have more information on how well the house could do.

The difference here is, when a real estate agent tries to sell their own house, they wait for
better offer giving them better profit. But when they have to sell your house, the waiting
does not really gain them much benefit. So, they convince you that the price they set is a
generous offer. Here is abuse of information. A real estate agent knows more and that’s
why they play with incentives.

This is not hidden process what so ever. People trying to sell or buy the house know that
an agent knows more, that’s why they hired them in the first place but the plan here is to
convert the whole scenario of knowledge into fear. Like the example given in the book,
'the neighborhood house not being sold for six months' creates a tense environment. Here
the transformation of action of information into fear is a key element in both the KKK
case in the 40s and the real estate play of psychology.

Even though they seem very smart, their work heavily depends upon the client they are
taking over. Are they buyers or sellers? Because the wordings to each one of them about
the condition of the house and the market heavily depends upon whom they are. There is
again the whole list of words related to selling of houses. Words like 'fantastic' having
less sales and again words like 'gourmet' having more. Some agents know this and they
have specific use of terms allowing fooling of consumers henceforth, exploiting the
power of information.

Levitt has also discussed the change in topography of information because of technical
development. Due to hand in hand availability of internet and computers, the information
are more easily assessable and are easy to communicate perhaps creating new form of
informational abuse. But such abuse is not a profound crime given that, how present
ourselves also is an abuse of information. We tell everyone everything. We have certain
way of viewing ourselves through others eyes. Like in a job interview or on a date, we
aren’t the same person.

Similarly, the chapter also explains the viewing of information. Cutting to the chase, the
Latinos seem more "less educated" to mainstream Americans and so, they are
discriminated on the first round the game, 'The weakest link', where the strategy is to
eliminate poor players in the beginning and slowly on tough players remain through
playing the final round. The taste based discrimination also prevails against elders where
other participants simply don’t want old people.

And finally, the use of power of information is also valid on day to day activities. People
with less power have the command of fear and so the people in more power abuse. In
market however fooling a client is creating an alarm. And so the KKK used the power of
information of their ability of brutality during the war. And real estate agents also use the
power of information and trickery to fool their clients on what is best for them. And this
use of power is also valid on our daily lives; statistics explains the benefit of using certain
phrases in dating sites, online shops etc., creating information asymmetry.

Analysis by

Group 3 (section A)