According to Investopedia, asymmetrical information or information failure occurs when one party to economic transaction possesses more material knowledge than another party, or they do not have the perfect experience. It typically manifests when the seller possesses greater knowledge than the buyer; however, the reverse dynamic is also possible.

Asymmetrical information

A good example of asymmetrical information is the relationship between a seller and a buyer. Whether it is a car salesman, estate agent, or realtor, or a marketplace, specific individuals always have more knowledge about the asset which they are trying to sell to an individual. The unfair advantage is also visible at a macro level on e-commerce as a sector.

American economist George Akerlof first analyzed the lemons problem in 1970. In his classic 1970 article, “The Market for Lemons,” Akerlof gave a new explanation for a well-known phenomenon: the fact that cars barely a few months old sell for well below their new-car price. Akerlof’s model was simple but powerful. Assume that some cars are “lemons,” and some are of high quality. When a party does not have access to information, they often use assumptions related to price.

Half-truths and realities

Over the past eight weeks, 2020 has evolved into a Black Swan that is accelerating decision making for some. We all are trying to look for logic amidst a global reset in economies, commerce, relationships, and information. Access to information has come into focus:

• Google Shopping was made free (with caveats),
• According to an investigation, Amazon accessed third-party data to create private label products,
• Unemployment has skyrocketed, yet no solutions are being discussed.
• Consumer behavior will change significantly while forgetting that humans are creatures of habit. (on another day)

Having written about perception and biases, unintended consequences previously, consumers have to make decisions based on information that is not always under their control. Legislation and regulation have evened the playing field for the first time, yet the accessibility of relevant information remains questionable.

When information is not visible or apparent

When you looked at the Google Shopping announcement or the news that Amazon has cut affiliate commission, the companies have either released a press release or said nothing publicly. In both cases, it would have been beneficial to Google and Amazon to disclose more context.

When Bill Ready wrote Google Shopping is free, well, that was a good headline, but if you read further, Google Shopping is only free for businesses on the Google Shopping tab. Name me a consumer that starts their product search on Google Shopping versus on Amazon. The answer to this question is indicative of the hard work that is ahead for Google.

If I asked you, what is the better discovery tool for local e-commerce currently with potential answers being Google and Instagram, I suspect many of you now have said Google. Well, no, its Instagram, and it is not even close. The sample size is one, but finding relevant local businesses on Google currently is all but impossible. Remember, when Google was the best search engine to find everything and anything? The current experience is far from useful, and as long as Google is dependent on search advertising for its revenues, I doubt it will improve.

The question which cant said aloud or written in the press

Unemployment has been on my mind recently as the number of applications has skyrocketed for government assistance in various countries. In the same breath, not a single article on a possible solution has been written, but retail has seen shop closures and bankruptcies accelerate. However, in the U.S., for example, retail is the largest source of employment, so what happens now? Globally retail is a massive creator of work; what can be done to help the affected people? Do not tell me they can be reskilled – how do you reskill experienced. Executives amid a period of uncertainty. I spoke with an entrepreneur this past week who provided me with some hope, but this is a huge problem that will impact economies for generations.

I will agree that working with the public is not for anyone, but once the virus is solved via a vaccine, consumers will still need clothing, food, etc. What no-one knows is how this new version of commerce looks and what will be the default consumer behavior.

Commerce, as we know, is, in no small degree, coming back, what can be done to ensure that it does not become a lemon which only benefits a few?

(I also promise going forward to throw the new normal into the sea, drive a bus over unprecedented as these words have lost their meaning.)