The Dangers of Information Asymmetry - Deepstash

The Dangers of Information Asymmetry

  • Economists warn that information asymmetry can cause markets to go awry.
  • Information asymmetry makes it easier to ignore the discrimination that's already present in the market today (the gender wage gap between men and women).



MORE IDEAS FROM Why you should know how much your coworkers get paid | David Burkus

The Salary Sharing Taboo

Most of us are uncomfortable with the idea of broadcasting our salary. We're not supposed to discuss that with our office neighbors. The assumed reason is that if everybody knew what everybody got paid, then all hell would break loose.

There'd be arguments, there'd be fights, there might even be a few people who quit. But what if secrecy is actually the reason for all that strife? And what would happen if we removed that secrecy? It turns out that pay transparency -- sharing salaries openly across a company -- makes for a better workplace for both the employee and for the organization.




Letting people know what you make might feel uncomfortable, but isn't it less uncomfortable than always wondering if you're being discriminated against? Openness remains the best way to ensure fairness, and pay transparency does that.

That's why entrepreneurial leaders and corporate leaders have been experimenting with sharing salaries for years. And studies show that, when people know how they're being paid and how that pay compares to their peers', they're more likely to work hard to improve their performance, more likely to be engaged, and they're less likely to quit.



When people don't know how their pay compares to their peers, they're more likely to feel underpaid and maybe even discriminated against.

For companies, pay secrecy is actually a way to save a lot of money. Keeping salaries secret leads to what economists call "information asymmetry." This is a situation where, in a negotiation, one party has loads more information than the other. And in hiring or promotion or annual raise discussions, an employer can use that secrecy to save a lot of money. Imagine how much better you could negotiate for a raise if you knew everybody's salary.




It's not one size fits all. Some post their salaries for all to see. Some only keep it inside the company. Some post the formula for calculating pay, and others post the pay levels and affix everybody to that level.

So you don't have to make signs for all of your employees to wear around the office. And you don't have to be the only one wearing a sign that you made at home. But we can all take greater steps towards pay transparency.



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Why we don't improve despite our hard work

The most effective people and teams go through life deliberately alternating between two zones: the learning zone and the performance zone.

The performance zone maximizes our immediate performance, while the learning zone maximizes our growth and our future performance. The reason many of us don't improve much despite our hard work is that we tend to spend almost all of our time in the performance zone. This hinders our growth, and ironically, over the long term, also our performance.






Time can be made. You can make it by managing your priorities. Suppose a mom's son had an accident todat, would she say that she has not much time left? You would name her a psypath to do so. It is because her first priority is her family. Suppose you work 40 hours a week and sleep for 56 hours a week, in total you have 96 hours spent. In total, there are 168 hrs in a week. Imagine the leisure time passing by.




Take 3 pages

  1. Make 3 columns on one. in the first one write 10 worst case scenario of the action/decision you gonna take. In the second, write how you can prevent them. In the 3rd one, write what will you do if they happen somehow. (how will you repair)
  2. In the second page- mention benefits of atleast taking the action. What would you learn new if you take that decision (even if it fails)?
  3. In the third page- write the cons if you don't take the action. What would you lose if you don't take the decision? What will be the effects for i) 3 monts, ii) 6 months, iii) 1 year.