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When I was writing a previous blog about Information Asymmetry and how European conquerors used it to scam indigenous societies of America, I was desperately looking for reliable sources that had information about the Conquerors trade practices. I thought to myself, for sure there is an AI tool that can handle my problem. After a short search I already found a fitting one. The name of the tool I found is Elicit. It is completely free, and you only have to create a personal account. Once, you do that you are greeted with a starting page and a search bar, similar to ChatGPT. In that bar you can ask whatever you want and Elicit will give you various scientific papers that deal with the topic of your search request. The AI also mentions the top 4 most fitting papers up top and briefly summarizes each of their contents. After conducting some testing about the reliability of the outputs I was satisfied and immensely happy about my discovery.

To me this discovery will be an absolute game changer. Finding fitting sources in a short period of time and without having to read through the whole paper was a huge pain point during my bachelor thesis. If would have known Elicit during that time I could have surely saved a lot of time. I very often found myself wanting to state something, that I thought to be right, without having the according scientific paper as proof, at hand. Elicit would have solved exactly that problem.

Elicit does not only benefit students but researchers as well. By quickly identifying relevant sources, it reduces the time spent on literature searches, allowing researchers to focus on experiments, data analysis, and conducting surveys. This efficiency can lead to more scientific papers being produced, as researchers can dedicate more time to advancing their work and driving innovation.

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The scientific paper Stealers of light, Traders in Brilliance: Amerindian Metaphysics in the Mirror of Conquest, written by Saunders, N.J. in 1998 beautifully outlines the extreme extends to which Information Asymmetry can go.

In 1942, Christopher Columbus set sail to discover a new route to India, China, Japan, and the spice islands. However, he never ended up there but instead discovered the “New World” which we refer to as America today. From there on it did not take long for other countries to seek interest in the new world and many ships from various nations embarked on colonial expeditions. The Europeans quickly discovered the wealth of indigenous people and began to engage in trade activities with them. Soon, trade started to flourish and opened the door to a variety of goods that influenced both societies heavily.

However, the trade relationship was never fair as the Europeans were at great advantage over the indigenous Americans. This is because the indigenous Americans believed the Europeans to be gods or supernatural beings. The reason for this is that for the indigenous Americans shiny objects, such as the Europeans armors, were seen as indicators of something that came from above. When Christopher Columbus, for example, first encountered native societies he wanted to make an impression and ordered his men to wear their armors, blow trumpet fanfares and fire their guns in the air which left the natives in awe. This, alongside with the Europeans horses, dogs and technological tools such as mirrors or guns strengthened the indigenous Americans belief about them.

Both sides were interested in trading their belongings and thought of the objects of the other side to be extremely valuable. The Europeans admired the amount of gold and silver of the indigenous Americans, and the indigenous Americans admired the Europeans “supernatural” and “cosmological” objects such as mirrors, glass beads, ironwork or glazed pottery. Because the Europeans knew the real worth of their objects, and did not disclose it to the indigenous Americans, they were able to engage in trading activities that heavily benefitted them. Christopher Columbus, for example, exchanged glass beads and metal artefacts for golden ornaments worn by indigenous leaders and aristocrats. In another instance, one of Columbus sailors smashed a dish of glazed porcelain and exchanged the shiny fragments for large quantities of pearls.

In believe that this example demonstrates how information asymmetry can lead to extremely unfair outcomes in trading relationships. When one party possesses important information that the other one is missing, an imbalance is created that can be exploited for significant advantage. Such a scenario highlights the importance of transparency and fair information sharing for fostering healthy trading relationships.

References:

Saunders, N. J. (1998). Stealers of Light, Traders in Brilliance: Amerindian Metaphysics in the Mirror of Conquest. Res Anthropology and Aesthetics, 33, 225–252. https://doi.org/10.1086/resv33n1ms20167010

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2 years ago, I interned at a german startup called Enpal. The company is originally known for providing solar panels to homeowners. What set it apart from competition was that Enpal offered a leasing model for their solar systems. The companies’ customers do not have to pay the full costs upfront but instead pay a monthly fee over a 20-year period, after which they can choose to retain the solar system for no additional costs. Installation of the system is free and Enpal services it for no additional costs. Because of the energy crisis in 2022 (The European Energy Crisis: Shock Therapy for the EU’s Clean Energy Transition, n.d.) the business model quickly gained traction, and I was able to experience the companies hypergrowth. However, what makes Enpal so remarkable is that the company evolved beyond just solar panels and power storage. Shortly after I left, the company expanded its product portfolio by also offering heat pumps and Wallboxes (for charging EVs). Their goal is to become an affordable one-stop shop for all energy needs of a household.

To interconnect all their products Enpal created an App which allows users to optimize their energy consumption. The App serves as a central platform for managing the household’s energy system. It provides users with real-life insights into their solar energy production, energy consumption patterns, and stats of interconnected devices like the Wallbox or heat pump. Moreover, the App offers recommendations on when to store generated energy, when to use it, and when to feed it back into the grid to earn money. Consequently, Enpals user interface offers full control over energy flow, helping homeowners to reduce costs and boost efficiency (Enpal, n.d.).

But in the close future Enpals business model will become even more interesting. The company recently announced that it wants to connect all installed Enpal systems into a virtual power plant. This allows the company to participate in the German energy market on a large scale ensuring greater value for its customers. In simple terms, this means that when electricity prices are low or even negative, all Enpal households will absorb power, while when prices are high, they will feed electricity back into the grid. The key advantage of this collective approach, compared to individual households acting alone, is that it utilizes economies of scale, maximizing efficiency and profitability across the entire network (Enpal, 2024).

I believe this example clearly illustrates how a company, initially focused on selling a single asset, can create immense customer value through the introduction of a platform and the interconnection of its products.

References:

Enpal. (n.d.). Solaranlage kaufen: Das Angebot vom Marktführer | Enpal. https://www.enpal.de/

Enpal. (2024, September 17). Enpal on LinkedIn: #podcast #enpal #vpp #energiewende #newenergy | 21 comments [Video]. https://www.linkedin.com/posts/enpal_podcast-enpal-vpp-activity-7241692352803684353-WcI_?utm_source=share&utm_medium=member_desktop

The European energy crisis: Shock therapy for the EU’s clean energy transition. (n.d.). https://epc.eu/en/Publications/The-European-energy-crisis-Shock-therapy-for-the-EUs-clean-energy-tr~575954#:~:text=In%202022%2C%20Russia’s%20invasion%20of,to%20generate%20electricity%20from%20water.