Borrowing a page from the works of Stephen Levitt, author of Freakonomics, Informational Asymmetry (IA for short. Sometimes also called Informational Advantage) is a fancy way of saying "I know more than you do." This is a vitally important concept in economics, and many facets of the Magic universe follow similar rules. We'll explore what precisely we mean when we discuss IA, why it's relevance to traders, and a few examples of how to exploit this concept in the game as a whole.

If IA is simply the advantage gained by having information that your "opponent" does not, we must first figure out what information we're working with. An opponent is someone whose goal is not well-aligned with your own goal, or is perhaps diametrically opposed. Though trading can be a fun, cordial and social activity, one must assume that a trading partner has only their own best interests in mind. Thus, they are an opponent, no matter how friendly your trade sessions may be.

Almost any information can be used to generate an advantage. The best way to illustrate this concept? Cards in hand. When you see your opponent's hand, you should ideally write down the contents, then check off the cards as they are played or discarded all the while they have no idea what you're holding. Thus, you can react to and plan for their cards, but they can't react to the cards they don't know you have! It's hard to quantify this IA, but it's undeniable that information has a value.

It's kind of unnerving to know that your opponent knows your hand, but that you haven't seen his. It is an example of how IA can generate fear over the unknown or imbalance of information. In Freakonomics, Levitt uses an example of a Realtor selling a house. Due to poorly aligned incentives generated by a poorly-scaling commission structure, a Realtor would vastly prefer a quick sale to a large sale, which is what you want in trading. In Magic, you can assume that your incentives are not aligned at all, but just as a Realtor can pressure you to take the first offer you get, you can make plays that account for your opponent's awareness of your knowledge. Just like you trust the Realtor because "they're the expert," your opponent assumes your plays are being made with the contents of their hand in mind. It then becomes far easier to bluff removal or countermagic as long as your opponent understands the concept of "playing around stuff." If not, you're probably winning anyway.

Turning away from the game, IA is worth a great deal on the trade floor. This is a very difficult concept, it seems, for many Magic players who believe that a card has only a single price or value. It's often manifested by quoting a single dealer's selling price. It cannot be stressed just how wrong that is. Informational Advantage is the reason traders can make money.

Returning to Levitt's book, which boils down to a case study on incentive economics, we need to address the issue of "ripping people off" before we continue. Previous essays have explained that Magic is a game of trading as much as it is of playing. There are set rules, common conventions and best practices. Each player of the trading game has his own set of goals and values which govern what he will and will not do within the scope of the rules.

The rules of the trading game vary depending on where you are, who're you are trading with etc.. At an event or a store, the rules state you cannot transact cash in the venue. It is your choice to follow that rule or not, but that is one rule I personally do not break. There is another way to "floor deal" that's equally as profitable and less disrespectful to the sellers who have paid money to rent a booth. This will be the focus of a future article, one which will come next week pending the feedback from a few dealers contacted at Grand Prix Atlanta.

Whatever the rules of engagement, an ethical trader should be following them. If we assume that we all strive to be profitable and ethical there seems to be a discrepancy between our both basic goals and the use of IA. This is where the difference between "ethical" and "honest" comes into play, and it is the crucial difference between the two that allows an ethical trader to maintain his margins.

Honesty is loosely defined as "always telling the truth" or "not lying". It is mainly an evaluation of the intended veracity of a person's statement or action. If you tell your mother you did not steal the cookie from the cookie jar, when in fact you did, you are not being honest. Besides, it couldn't be you! Then, who? If you admit you ate the purloined treat, you're being honest, right? Clearly. What if you stole the cookie, but you refuse to answer her question, pleading the fifth and citing "children have rights too"? Is that honest? Well, yes. Your statement is factually correct. Nothing you say is a lie. You are surely being cagey and defending yourself by denying your opposition, Mom, the information you have. This information, the cookie thief's identity (you), is the information she needs.

At the very core of it all, there's an information transaction occurring. When this is the case, one party necessarily has IA! You have all the leverage since she has no clue who took the damned oatmeal raisin delight. You know that you yourself took it. Clearly, you hold the informational advantage, and by staying mum* you deny her the even playing field she seeks. She can attempt to renegotiate the terms by asserting her authority, and frankly, most young bakery robbers won't have the courage to stonewall dear old Mom like that, but the proof of concept holds up. You know something she does not, thus you have the power.

Were you to respond to her interrogation by telling her "I did not steal the cookie" or "I don't know who did", you would now be considered lying. Assuming that lying is not permitted in the rules of our game because we strive to be ethical, we must find a creative solution. Rather than deliberate on the ways to obscure the truth when stealing baked sundries, lets get to the Magic examples instead. There are two questions we need to answer. First, how do we gain IA in Magic when trading? Second, how do we leverage it without lying?

To tackle the first question, we need to get a scope on what information truly matters. In a trade, there are a ton of variables at work, but the main concern is of course price. People don't quite understand how to price cards. Many believe that running a card through a dealer site and checking their sell price is good enough, when in fact it is the most useless practice on earth. It is up to you to decide how to use the information on the Internet, where 99.99%** of relevant Magic prices can be found, to value your cards. I can't say too much more about this, but i can say the following: in an open market where there is little automation, many currencies being exchanged and many different value systems in place, a savvy information gatherer can find and exploit many informational advantages simultaneously. Here's a hint: know your dealer buy prices!

When you're trading, it pays to know what a handful of dealers are buying and selling for. The problem is, this information takes time to gather and process. Your trade partner is completely able to do the same, should he wish to invest the time and effort to do so. If he is not able, he should not be transacting financial instruments with monetary values. At an event, you are at leisure to discuss bid/ask prices with the dealers and take notes. Online, you can check any sites that sell or buy Magic cards. It's not rocket science, kids! Should you choose not to do this, expect to be on the short end of the IA stick and do not be surprised if you get informationally taken-advantage-of.

To now answer the second question, how to ethically leverage your IA once you've gotten it, we have to draw a line between deception and dishonesty. Trading is a game just like Magic. In an interview I did for my UNTAPPED World Tour, a very successful trader discussed that to him, trading is not about the money. He no longer needs money. He trades because it's a fun high-stakes game. Each trader is looking to get one over on the next one by leveraging IA. Once we understand that trading is simply a game where a winner is determined by profitability, we can start finding ways to ethically leverage IA.

The classic example is when Dealer A is buying Card X for more than most other dealers. That is valuable information, and it speaks directly to a cash buy price rather than a vague sense of a profitable trade. This is not information an opposing party should know! Why, then, would you give it to him? Well, you might actually do it to ingratiate yourself to your trading partner in expectation of future returns, but in most cases, you should keep your mouth shut. Why give your opponent information that's otherwise free? It's like being Thoughtseized on the first turn, and then being asked by your opponent, "What was in your hand again?" The DCI rules even state that the contents of one's hand are not public information, so when Thoughtseize is resolved, your hand contents go back to being secret. Thus, you can actually, legitimately lie about the contents without repercussion. It's kind of a jerk move, but it's legal.

When trading on the floor, your goal is to have the best information possible and keep as much of that from your opponent as you can. The best way to remain deceptive and difficult to pin down? Don't lie, but use the numbers you're comfortable with! You clearly are willing to spend the time gathering data and formulating ideas about how low to pick up what cards, so take advantage of this fact. Here's an example of an interaction I've crafted to showcase what I suggest. This is fictional, and should serve as a helpful conclusion to the lesson on IA.

YOU - I'm interested in your Card X. What do you put it at?

(note that you are not asking what it's worth, but what they value it at. Their value is their own, especially if they set it themselves!)

THEM - I'm not really sure. I'm not good with prices.

(This is BS half the time. Most people trading cards know what they're worth. Still, give chase a bit.)

YOU - Oh, alright. Well, Dealer A is selling them for $5 cash, but there's no way I'm buying them for cash. I can trade for them at $3.

(A lot going on here. One, you're accepting that they probably just lied to you about not knowing prices just to feel them out a little further. Two, you're intentionally divulging true but incomplete information. Dealer B might be selling them for $10. Dealer C might be buying them for $4. You're not obligated to deliver a full financial report of the card, but you're free to use whatever info you'd like to make the trade work for you. Think of it like showing your opponent one card from your hand to put them on tilt! Additionally, you're setting up a precedent that cash prices are higher than trade prices by a wide margin. FInally, you're making a counteroffer with justification stating only what you can do and speaking nothing to the card's "price" or "value")

THEM - Sorry, that's too low. I can't do $3.

(This is when you know they bullshat you earlier. How do they know it's too low when they "don't know prices" or whatever? That's why you lowballed them - to feel them out.)

YOU - You clearly have a number in mind, so don't make me guess it! If you're not happy with $3, just tell me what number you need to hear and we'll see if we're even in the same ballpark.

(I say this verbatim very often. I don't suffer fools or liars, but I like to make deals. The sooner you level with me, the more likely I am to make a deal with you. Also, be sure to be friendly when saying this ,rather than sounding oppositional. It goes a long way.)

THEM - Well, if I can buy one cash for $5 on the floor, how's $4 in trade sound?

(This is pretty much the response you'll get in this case, with minor variations.)

YOU - To be frank, I need to make a little on my trades, you know? Got to fuel the habit. $4 seems a bit high for my tastes, though entirely reasonable. No worries. I think I can do a playset for $14 if that agrees with you?

(This is all gold. You're being totally honest here. You're leveling with them by saying that you need to make a buck or two and they'll appreciate the honesty and a bit of humor - fuel the habit. You're again not lying to them, only telling them what you can and cannot do. You're also making them feel OK about their pricing by calling it reasonable and letting them know you're willing to walk. Finally, you make a counter offer of $3.5, which will net you $16 in cash due to Dealer C's $4 buy price. Instead of sounding like a cheapskate by arguing between $3 and $4, you abstract the price by another whole layer by speaking in playsets. The price has not changed, only the perception. It's not relevant how many of the card you're transacting.)

THEM - Could you go $15?

(Now they're playing your game by quoting playset prices. You're still dancing between $3 and $4, but they're using your language. Time to close the deal.)

YOU - Hmm...to be honest, I think my interest was already fading at $3.50 a card and now we're up to $15 a playset. I don't mean to waste your time but I think I'll pass at $15. I'll take $14, but I think I'll pass at any number above that.

(You'd probably take $15. IF you want to, feel free, but I find that it helps your image to ask for some "clemency" on the next part of the deal, ie. Just kick me some extra value on the next trade or throw something small into it. Note the use of two different metrics in that statement - playset vs single card price. You show your willingness to walk away, politely and with no ill will, and you give your partner the friendliest ultimatum possible. You will almost always close the deal here, but if not, you were not likely to come to an agreement anyway.)

So, in conclusion, dont ask me how to get IA.

* - Pun fully intended. I'm no LSV, but I'm trying here folks.

** - A statistic I am 100% fabricating.