Informational Asymmetries

Something that economists love to analyze and play around with are informational asymmetries. They want to know everything about them. What gave rise to them, how they are maintained, how it affects markets and decision making, etc. You yourself have tonnes of experience with informational asymmetry. Well, you do but probably didn’t call it that. I mean not being an economist you probably have better things to do than go around labelling things with funny names.Remember that time you wanted to buy a car? Yup, that was informational asymmetry. What about that time you were set up with that disasterous blind date? Yes, that too. And what about the time you went to the dentist to get your wisdom teeth pulled? Yes, you guessed it. That was informational asymmetry also.So what is it exactly? It’s any situation where everyone involved doesn’t have the same quantity and quality of relevant information. Two guys even wrote a rather boring (unless you are into economic and econometrics) paper on this and got a Nobel prize for their trouble. Go figure.So when you went to buy a car, the dealer knew exactly how much it cost her and exactly how much she would be making. She also knew some other things like that a colleague of hers in a nearby city was selling the same make and model for $1000 less. But those things, as you can understand, she chose to convey to you only through the unspoken action of smiling in your direction.

In the blind date, you knew in the first few seconds that things were not going to work out because of your date’s bad manners or bad breath (or both). But the other person necessarily didn’t know this. They are even now totally confused why you didn’t call back.

And the dentist? When he recommended that you needed to pull out your wisdom teeth he probably didn’t mention that you really didn’t because there was a very good chance your jaw could accomodate the new arrivals. You, of course, didn’t know this as you weren’t the one who studied dentristry.

But what does this have to do with the Baha’i Faith? Well, a lot it seems. The more I think about informational asymmetry, the more I see it as something plaguing the Baha’i community today. Let me run through some things which are real challenges within the Faith right now and you’ll see that they are totally related to this phenomena.

Any noetic work from a Baha’i must go before a ‘review board’ before it is published, or otherwise made available to the public. This process was enacted by Abdu’l-Baha and continued by Shoghi Effendi. Its noteworthy that they both maintained that it was a temporary measure. Today it is simply an anachronism. But then again there simply is no better way to create informational asymmetries and assure they are maintained than to simply filter the creation and dissemination of ideas.

This is a rather strange example because asymmetry seems to increase the higher you go up. The vast majority of local communities are very transparent when it comes to the Baha’i funds. Reports are made on time and are available at Feast. And if you miss Feast, your friendly neighborhood Treasurer can clue you in easily. As you go up to the National level, it gets a bit murky. Reports aren’t available on time (I guess it takes time to prepare it) and they are vague. What’s more, it is a very rare to spot a balance sheet anywhere. All you get are stale and vague numbers for the income statement. Going further up – where worldwide decisions are made – you get pitch black. The cloak of secrecy at the UHJ/ITC is simply not penetrated. Ever. No financial statements (either balance sheet or income statements) are ever released and any queries are returned either totally unanswered or with a vague and general response which is devoid of any significance.

Most Baha’is don’t have a clue that the UHJ/ITC forces Counsellors, ABMs and Assistants to ABMs to create and maintain files on individual Baha’is. To me this is very creepy and KGB like for any organization, nevermind a religion which espouses the lofty ideals of the Baha’i Faith. But however unsavory, this practice finds a place on this list because Baha’is are not informed that there is a ‘file’ on them and two, they are not informed as to the contents of that ‘file’. Coupled with the lack of due process, this guarantees that any mistakes, lies, misrepresentations, half-truths, exaggerations are not corrected; thereby increasing informational asymmetry.

I would be the first to insist that there are many things that pass by an assembly meeting which should be kept strictly confidential and yes, totally secret. Common sense tells me that matters involving personal and intimate details of an individual’s life – such as marriage, divorce, disputes, etc. – should be kept confidential. However, I’m uneasy when a blanket confidentiality is extended to all matters discussed in an assembly and no minutes are released (even filtered to remove the personal information I mentioned above and time delayed). I believe it is the right and responsability of everyone in the community to know that which affects them collectively and to be involved. Being shut out only increases informational asymmetry.

RESEARCH & SOURCE MATERIAL: There are literally thousands of documents in the Baha’i Archives in Haifa (as well as the Afnan Library in the UK and the US Archives and elsewhere) that are kept behind lock and key. Only those scholars vetted by the UHJ/ITC (basically those that agree to all its policies and have never objected to anything they have every written or said) are allowed access to them. Usually the red herring is trotted out that the Baha’i World Centre needs time to translate them into English. Although I don’t doubt this, it doesn’t mean that they can’t scan them and put them up on the web so that all scholars have access to such valuable documents. Why is the BWC acting like a cantankerous Amish farmer, if not to create and maintain informational asymmetry?

LACK OF DUE PROCESS: There are tonnes of examples here. Where to begin? I’ll use Alison’s expulsion, as a convenient example. Even after so many years, it still remains a mystery why she was expelled. The UHJ/ITC has not communicated to her, the NSA of NZ or to anyone else the reason(s) why she was treated as she was. Oh sure, there has been much speculation by many but we simply don’t know why the UHJ/ITC made the decision. That’s because there was and is a complete lack of due process. Due process is of course one of the mortal enemies of informational asymmetry.

Along with this example, we can consider the generally vague and imprecise manner in which the Administration communicates with Baha’is. Either no information is provided or if any if forthcoming, it is vague and devoid of any precise meaning. As an example, consider that when the LA class met with Nelson (a member of the NSA of the US) they asked him why the NSA was levelling charges of ‘partisanship’ against them. They asked him to back up this allegation. All they received from Nelson was that the terms used by the NSA would become ‘clear upon reflection’. This is a very clever way of creating informational asymmetry because the person is acting coyishly like ‘an expert’ and the onus is shifted on to the questioner. It isn’t the job of the ‘expert’ to provide an answer, the questioner must reflect and find it themselves.

CENSORSHIP: Here I’m referring to the closing down of informal discussion venues and medium (as opposed to individual works such as papers and books which is covered by the ‘pre-publication review’). Obvious examples are: Dialogue, Talisman (I) and the LA class of the 70′s and early 80′s. As well as the concerted effort to block the creation of talk.religion.bahai (in order to keep Baha’i discussions on Usenet under the heavyhanded moderation of soc.religion.bahai). Another example is the monopolistic control over national Baha’i magazines. These monthly publications, which are strictly steered by the respective NSAs, only publish saccharine articles rather than reflecting the reality most Baha’is experience. In short there is no ‘freedom of the press’. Except for the internet. But I estimate that less than 1% of Baha’is uses this medium (either because they have been scared off by the AO and/or because they simply don’t have access to it).


Looking through that list above its rather obvious that one common thread runs through them all. They all are either creating or perpetuating informational asymmetry. And if you know anything about informational asymmetry, then you know that that is not a good thing.