Information asymmetry and information sharing

Although much digital divide research focuses on access to technology, another cause of the divide is the lack of information awareness that we call information asymmetry. Information asymmetry often stems from inadequate information sharing and can result in negative consequences for both the information poor and the information rich. Information asymmetry has been insufficiently studied as a possible cause of underdevelopment and inequality. In response, we develop a typology to classify information asymmetry into two categories, horizontal and vertical, and then identify those information sharing practices that cause the imbalance. To illustrate the negative consequences of information asymmetry and the potential benefits of information sharing, we discuss two examples from the experiences of modern American Indian tribes. First, Indian tribes face horizontal information asymmetry when they attempt to access the capital markets, and second, they face vertical information asymmetry in terms of law enforcement data sharing. This article also describes our ongoing examination of horizontal information sharing among tribes and vertical information sharing between tribes and others sovereigns in the American polity as possible solutions to the problems created by information asymmetry. These strategic responses are embodied in two information systems, the Tribal Financial Information Clearinghouse and an Intergovernmental Tracking System for sharing law enforcement data. We conclude with a discussion of how our typology can be more generally applied to other instances of information asymmetry. (c) 2007 Elsevier Inc. All rights reserved.