The Principle of Information Asymmetry

Information Asymmetry is a concept that I first read about in a book entitled Freakonomics by Stephen J. Dubner and Steven D. Leavitt. It's not a new concept. It's been around awhile. In economics, information asymmetry is where one party in a transaction has more or better information than the other. Think of the last time you shopped for a used car. Did you feel like the seller had more information than you? How did that affect your willingness to buy? Buyers, when they have the right information are able to recognize fair value in a purchase and protect themselves from losing money. 

Information asymmetry affects both buyers and sellers. As a seller, If you do not have the right or equal amount of information about what you are selling, you will not get a fair price, or worse, you will not recognize a good offer when you get it. The asymmetry of information skews the transaction, giving advantage to the party with more or better data.

So, what does this have to do with your job hunt? Market principles apply to job hunting because there is a market for good employees out there. Of course the market is competetive, and any way you can get more, better, and more timely information, the better advantage you will have over your competitors. Your ability to give employers more, better, and timely information about yourself (as in creating an effective resume) is just as important. And finally, the information you can research and learn about your industry, the employer's needs, the market for your skills and salary ranges for which you qualify can greatly help in that final stage of getting a job - negotiating your salary.

Therefore, anything you can do to eliminate information asymmetry against you (and better yet, create asymmetry for yourself)  can greatly impact your success. Over the years, the internet has become a useful tool in helping equalize the availability of information for buyers and sellers in all kinds of markets, including the job market. Some of these tools include: 

• Online networking tools (Linkedin, Facebook, Naymz)
  
• Industry discussion boards and forums
  
• Job search tools (indeed, Hound, Jobing, Monster)
  
• Employer websites
  
• Other websites containing employer information (Glassdoor)
  
• Blogs and news sites
  
• Salary and currency calculators
  
• Search engines and encyclopedia (Google, Yahoo, Wikipedia)
  

The authors of the book Freakonomics maintain a blog on economics and related information which you can find here.