How do you manage the affects of asymmetric information when you are shopping?
It presents a problem when I’m in a vulnerable situation where a seller has superior information about a product I’m interested in. I was in the market for an electrical acoustic guitar and found one with high quality sound w/o being plugged in yet I was nebulous concerning the quality of this brand’s electronic components. The salesman assured me they were first rate. Nevertheless, I went on-line to some consumer reviews and reports and found the guitar to be problematic with longevity of these pick-up components. It cost the majority of the price of the instrument to replace these electronics, which seemed to have a life of about four years. I passed on the purchase.
This is the last chapter in the course. I hope you have enjoyed the course and are saddened to see it end. What concepts or theories did you find most interesting and/or useful? Is there an area where you changed your thinking?
I’ve always been rather skeptical and certainly cynical about people’s motives in life itself. This last chapter really solidified a moral hazard consumers encounter throughout their lives. Hidden actions, hidden characteristics and ulterior motives run rampant in today’s market. I seemed to be lied to more than I’m told the truth. I bought a used Trek bicycle two months ago and was assured it worked fine. Upon finally riding it when the snow melted, I found the 21 gears to be only 16. I called the seller and his x-wife said he moved to Oregon and my bike had always been defective. Shame on me. I like the text’s recommendations of employers to better monitor workers actions with videos. I also used to pay my employees a higher wage to attempt to deter theft or torpidity at job sites. I agree with the efficiency wage theories talked about in Ch. 19. The delayed payment idea is also an excellent one to implement in my upcoming business. The year-end bonus would promote better efficiency as well as incentives for staying on the job. Advertising agencies spend millions signaling to potential consumers they have high-quality merchandise. The world of consumer products can be summed up as one big process of signaling. But the validity of the signal has to always be in question to me. I guess I’ve allowed flimflammed and myself to be bamboozled too many times. My thinking hasn’t changed much in this area but thank you that others are applying various solutions to monitor worker and product quality.