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Does the Internet Help Reduce the Asymmetric Information Problem?

Thanks to the Internet and all kinds of online resources, consumers can now use asymmetric information for their advantage. For instance, buyers can research insurance rates, car prices, and restaurants and hotels online and learn a lot about what other consumers say about these businesses. In the past, these buyers had much less information to use when judging the qualities of goods, services, or companies.

At the same time, however, this advantage is a double-edged sword, because companies profit from the Internet too, as they use online resources to develop informational advantages over consumers. For instance, companies can now use online research tools such as “cookies” to determine the viewing behavior and the “clicking” habits of consumers, and thus develop marketing campaigns to take advantage of carefully sourced consumer habits. Discuss.

Assignment Requirement:

Minimum 1 Page Double Space, APA Format, 2-3 Credible Sources for References

Reading Required:

Economics Online. (n.d.). Information Failure [Video file]. Retrieved from http://www.economicsonline.co.uk/Market_failures/Information_failure.html

‪Lillo,F. (2013, July 10.) Tutorial An introduction to asymmetric information [Video file]. Retrieved from https://www.youtube.com/watch?v=jtQCRPJ4K9o

Smith, P. (2013, Aug. 3). Econ in HD: Moral Hazard and Adverse Selection [Video file]. Retrieved from https://www.youtube.com/watch?v=XH70zIJP5cM

Thoma, M. (2013. Explainer: What is “moral hazard” [Video file]? Retrieved from http://www.cbsnews.com/news/explainer-moral-hazard/

Tomlinson, S. (n.d.). Understanding Asymmetric Information as an Economic Problem. Retrieved from http://college.cengage.com/economics/0538797274_mceachern/student/transcripts/8447.pdf

Webpedia. (n.d.).Assymetric Information. Retrieved from http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=asymmetric+information

Tomlinson, S. (n.d.). Understanding Moral Hazards in Markets. Retrieved from http://college.cengage.com/economics/0538797274_mceachern/student/transcripts/8448.pdf

Citizendiu. Moral Hazard. Retrieved from http://en.citizendium.org/wiki/Moral_hazard

Economicshelp. (n.d.). Asymmetric Information Problem. Retrieved from http://www.economicshelp.org/blog/glossary/asymmetric-information/

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