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What is information asymmetry? How does it benefit businesses? Is it ethical? These questions might come after an individual read the book titled Freakonomics. This website will explore some facts and cases in an attempt to answer those questions.

     Recently, there is a lot of news in Indonesia about Gayus Tambunan, a man who is accused of helping many big companies to avoid taxes. Before he was arrested, Gayus worked at the government’s office called Kantor Pelayanan Pajak (Tax Service Office) as a tax officer. He was graduated from The National Institute of Accounting (Sekolah Tinggi Akutansi Negara). He was one of the smartest students in his batch. That is why he knows a lot of things about accounting, especially about preparing financial statement, tax report, and the most importantly about some weaknesses in government tax rules. Unfortunately, he used this information to benefit himself by helping companies to avoid paying the appropriate amount of tax. For this service, he earned huge amount of money.

     As a tax expert, Gayus knows more about tax than most ordinary people, including the company and government officers. Gayus became an expert in taxes . This kind of situation is an example of information asymmetry. With this situation, it is easy for people like Gayus to take the situation for his own benefit.

      Another example on this matter in a daily-based businesses situation is the real-estate agents. Their job is actually, to help people sell or buy houses. To get this done, they give us the information about the best price a seller or buyer could get. The questions are, is this information appropriate and accurate? Does it benefit us? Or is it beneficial only for the real-estate agents?

     Real estate agent knows that if he wants to sell your house and wait for at least ten days long, you can get a better price. Do they do that? The truth is, they don’t, because it will cost them a lot of effort and time. So, instead of waiting for ten days, they take the first offer, and tell you that this is the best offer you can get, otherwise your house will never get sold. If you encountered this situation, what would you do? Most likely you would take this offer, because you are afraid.

     This explains how information asymmetry faced by the house sellers and the house agents. In this kind of situation, the house agents benefits from the information that they know more than the house sellers and buyers. There are a lot of other examples that explains and proof where information asymmetry occurs every day. Is it always bad? If yes, how can we avoid this? Is it okay to take benefit from it? You might need to scroll your mouse and make some clicks in this website to be able to answer the questions more satisfactorily.

Copyright © 2011 Ionwyn Sean