The Ku Klux Klan and Real-Estate Agents

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At first glance the Ku Klux Klan and real-estate agents vary greatly in their motives, profession, and even morals which influence different actions. However, when glancing at the human characteristics of each group’s actions and the incentives behind each approach, microeconomics links the two correlations on one common ground: information. Information can be both beneficial and costly depending on the viewpoint as either the household or firm. When considering, for instance, information regarding housing prices available to the public on the internet, real-estate agents lose a portion of asymmetry where information which is known by the agent is not necessarily known by the household. This use of information as a scarce resource can then be allocated to fulfill the incentives of the real-estate agent which similar to most human beings, is to obtain the most profit from a limited amount of resources within reason of costs and benefits. In similar ways the Ku Klux Klan’s incentive changed during the time it evolved from a once dormant group into a popular assembly during the early 20th century. Used as an incentive for fear by real-estate agents, and as the source of secretes for the Ku Klux Klan, information can be viewed as a basis of economic influences.

Over time the Ku Klux Klan evolved from a group which often lynched African Americans, to more of a social organization which rarely lynched. This disappearance can be described using the theory of economic incentives and the costs/benefits of each decision. When lynching first began, it was not yet well known the direct correlation between African Americans which disobeyed the law and the amount of lynchings. Once a significant amount of lynching began punishment transfor...

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...self interest. The tendency nonetheless, is that most rational people act in their own best interest given incentives. Although professionals such as doctors may use asymmetrical information to their own benefit diagnosing patients for a profit, ultimately it would be in the best interest for the doctor to consider the cost/benefits of a misdiagnosis. If discovered, the credibility and amount of cliental will dramatically decrease, possibly costing the doctor his practice Acknowledging the importance of asymmetrical information along with the custom fear associated with certain situations, such as with doctors or real-estate agents, allows one to better evaluate their actions, and achieve wiser outcomes.

Works Cited

Dubner, Stephen J., and Steven D. Levitt. “The Ku Klux Klan and Real-Estate Agents.” In

Freakonomics. New York: HarperCollins, 2009.

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