A famous paper by Nobel economist George Akerlof showed there is a market for lemons when there is asymmetric information about car quality — when the seller knows more than the buyer. That kind of market distortion can happen in the news world as well, where a similar information asymmetry arguably exists. The media in general know (or are supposed to know) better than the public where the truth lies. That’s one reason we often believe what we read or hear.
Case in point: One of the most painful scenes in recent days was Louisiana Governor Bobby Jindal on CNN insisting that no-go zones existed in some form in the U.K., and struggling to redefine those zones so he wouldn’t seem like a liar.
I was a student with Jindal 20 years ago and have followed his career with fascination. He’s extremely intelligent, notwithstanding his critics. But Jindal was trapped by the fact that he assumed that what he or his aides had heard on Fox must be true. The recantations were secondary.
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