IDEAS home Printed from https://ideas.repec.org/a/khe/scajes/v4y2018i4p96-101.html
   My bibliography  Save this article

Online Trading and Adverse Selection in Smartphone Market

Author

Listed:
  • Fulgence Dominick Waryoba

Abstract

Information asymmetry that dominates almost all market operations deters market performance and in some markets may lead into non-existence of market due to adverse selection problem. This paper hypothesizes that online trading reduces adverse selection problem in Smartphone market. The findings show that high quality Smart phones sell more than low quality Smart phones. Therefore, trading online induces signaling which reduces the problem of information asymmetry thereby offsetting adverse selection problem.

Suggested Citation

  • Fulgence Dominick Waryoba, 2018. "Online Trading and Adverse Selection in Smartphone Market," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(4), pages 96-101, December.
    • Handle: RePEc:khe:scajes:v:4:y:2018:i:4:p:96-101
    as

    Download full text from publisher

    File URL: http://www.ajes.ro/wp-content/uploads/AJES_article_1_213.pdf
    Download Restriction: no
    File URL: http://www.ajes.ro/wp-content/uploads/AJES_article_1_213.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gregory Lewis, 2011. "Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors," American Economic Review, American Economic Association, vol. 101(4), pages 1535-1546, June.
    2. HOLMSTROM, Bengt, 1979. "Moral hazard and observability," LIDAM Reprints CORE 379, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
    4. Justin P. Johnson & Michael Waldman, 2010. "Leasing, Lemons, and Moral Hazard," Journal of Law and Economics, University of Chicago Press, vol. 53(2), pages 307-328, May.
    5. Genesove, David, 1993. "Adverse Selection in the Wholesale Used Car Market," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 644-665, August.
    6. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
    7. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    8. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ollinger, Michael & Benicio, Casiano, 2014. "The Food Safety Performance of Chicken Suppliers to the National School Lunch Program," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169380, Agricultural and Applied Economics Association.
    2. Henri Loubergé, 1998. "Risk and Insurance Economics 25 Years After," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 23(4), pages 540-567, October.
    3. Dongyuan Zhan & Amy R. Ward, 2019. "Staffing, Routing, and Payment to Trade off Speed and Quality in Large Service Systems," Operations Research, INFORMS, vol. 67(6), pages 1738-1751, November.
    4. Jonathan R. Peterson & Henry S. Schneider, 2017. "Beautiful Lemons: Adverse Selection in Durable-Goods Markets with Sorting," Management Science, INFORMS, vol. 63(9), pages 3111-3127, September.
    5. Conning, Jonathan & Udry, Christopher, 2007. "Rural Financial Markets in Developing Countries," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 56, pages 2857-2908, Elsevier.
    6. Emir Kamenica & Matthew Gentzkow, 2011. "Bayesian Persuasion," American Economic Review, American Economic Association, vol. 101(6), pages 2590-2615, October.
    7. Athreya, Kartik B., 2014. "Big Ideas in Macroeconomics: A Nontechnical View," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262019736, December.
    8. Roberta Sisto & Giustina Pellegrini & Piermichele La Sala, 2019. "Dual quality food: A negative social externality or a competitiveness opportunity?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(7), pages 307-313.
    9. Bengt Holmstrom, 1999. "Managerial Incentive Problems: A Dynamic Perspective," NBER Working Papers 6875, National Bureau of Economic Research, Inc.
    10. Richard Franza & Kevin Grant & W. Spivey, 2012. "Technology transfer contracts between R&D labs and commercial partners: choose your words wisely," The Journal of Technology Transfer, Springer, vol. 37(4), pages 577-587, August.
    11. Balakrishnan, Ramji & Penno, Mark, 2014. "Causality in the context of analytical models and numerical experiments," Accounting, Organizations and Society, Elsevier, vol. 39(7), pages 531-534.
    12. R. David Simpson & Roger A. Sedjo, 1994. "Commercialization Of Indigenous Genetic Resources," Contemporary Economic Policy, Western Economic Association International, vol. 12(4), pages 34-44, October.
    13. Dionne, Georges, 2012. "The empirical measure of information problems with emphasis on insurance fraud and dynamic data," Working Papers 12-10, HEC Montreal, Canada Research Chair in Risk Management.
    14. Arne Nygaard & Ingunn Myrtveit, 2000. "Moral hazard, competition and contract design: empirical evidence from managerial, franchised and entrepreneurial businesses in Norway," Applied Economics, Taylor & Francis Journals, vol. 32(3), pages 349-356.
    15. Bartsch, Elga, 1996. "Enforcement of environmental liability in the case of uncertain causality and asymmetric information," Kiel Working Papers 755, Kiel Institute for the World Economy (IfW Kiel).
    16. Alexander, Corinne & Ivanic, Rasto & Rosch, Stephanie & Tyner, Wallace & Wu, Steven Y. & Yoder, Joshua R., 2012. "Contract theory and implications for perennial energy crop contracting," Energy Economics, Elsevier, vol. 34(4), pages 970-979.
    17. Timothy Fogarty & Michel Magnan & Garen Markarian & Serge Bohdjalian, 2009. "Inside Agency: The Rise and Fall of Nortel," Journal of Business Ethics, Springer, vol. 84(2), pages 165-187, January.
    18. Dionne, Georges & Harrington, Scott, 2017. "Insurance and Insurance Markets," Working Papers 17-2, HEC Montreal, Canada Research Chair in Risk Management.
    19. Giorgio Coricelli & Luigi Luini, 1999. "Double Moral Hazard: an Experiment on Warranties," CEEL Working Papers 9901, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    20. James Jr., Harvey S., 2002. "The trust paradox: a survey of economic inquiries into the nature of trust and trustworthiness," Journal of Economic Behavior & Organization, Elsevier, vol. 47(3), pages 291-307, March.

    More about this item

    Keywords

    Information asymmetry; adverse selection; signaling;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:khe:scajes:v:4:y:2018:i:4:p:96-101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adi Sava (email available below). General contact details of provider: https://edirc.repec.org/data/ffucdro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.