Is Sensei a Lemon? Uncertainty and the Karate Market

Why are the vast majority of Karate instructors below average? George Akerlof’s research on information asymmetry explains this apparent mathematical impossibility.

Akerlof described the market effects of information asymmetry in his seminal paper, A Market for Lemons, using the used car market as an example.

How Asymmetry Sours A Market

Imagine a uniform distribution of used cars across the quality spectrum: some cars are in excellent condition, some are in poor condition, and some are in-between.

A seller, who has experience with their car and its defects, can make a reasonably accurate estimate of the car’s value. This value is opaque to the potential buyer, however, who knows far less. Without a detailed professional inspection, the buyer has only the information they can glean from a test drive, and from those repair records the seller is willing to share.

With this uncertainty in mind, the buyer typically assumes the car is of average quality, and is willing to pay accordingly.

Against this assumption, we find two categories of seller. Those who believe their car is of average quality or below will happily profit from the sale. Sellers whose cars are in excellent condition, however, have little incentive to complete the transaction. Consequently, the highest-quality used cars tend to stay off the market; this causes the mean quality of available cars to skew downwards, and a disproportionate supply of lemons.

Left unchecked, the feedback loop between sliding product quality and buyer uncertainty results in a market dominated by crap.

Information Asymmetry in Karate

Just as the average used car buyer is unqualified to perform a comprehensive automobile inspection, the average Karate student lacks the means to evaluate the quality of a potential sensei.

This natural lack of transparency, combined with an absence of objective metrics and quality assurances define the Karate business as a lemon market. This is true for Karate as a product, and to a somewhat lesser degree, for Karate instruction as a service.

Newcomers to the Asian martial arts encounter a confusing hodgepodge of Confucian morality, paramilitary discipline, and hidebound superstition blended seamlessly into the physical education curriculum; in such a bizarre and foreign environment, it is difficult to gauge normalcy, much less evaluate the superiority of a particular instructor and their teaching methods.

How then should the Karate customer proceed? Initially, intuition is the one and only guide. Under-informed opinions about the sensei’s apparent skill level may eventually prove to be off the mark; nevertheless, such judgments are a necessary part of the due diligence every student should perform before selecting a school.

Statistically speaking, a student’s first choice is likely to be a poor one. So long as they continue to develop their critical understanding of Karate practice—rather than drinking the stagnant dojo Kool-Aid—the student can learn and grow from this otherwise negative experience.

If sensei is a lemon: make lemonade.

[tags]karate, sensei, economics, business, uncertainty, the market for lemons, lemon law[/tags]

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