Information Asymmetry: When Blind Dates Become Desirable Part 1

One of the major problems with Information Asymmetry is that because people don’t have all the information about a certain product, its price cannot truly reflect its real value. What can you do if you’re the superior product and you want to stand out from the run-of-the-mills? Often some sort of assurance can be used to gain the buyer’s confidence.

In our society, there are many means set up to create certain guarantees regarding a product/person. These guarantees provide extra information, and they’re valued based on their impartialness. For example:

1. -The “Certified Organic” labels we see in grocery stores.
2. -Honda’s Certified Used Cars (so buyers can distinguish them from the potential lemons on the lot).
3. -A clean driving record (history is a good indicator of the future).
4. -A spotless credit rating.
5. -Education credentials. (I once met a guy at a friend’s gathering. He was one of those cool kids who peaked in high school. Once he sat down, he started ranting about how only stupid people finish high school, and he was too smart for that. He never once stopped and asked anyone how they were doing, or even asked who they were. He was too busy being self-conscious and overcompensating. NOT ATTRACTIVE!)

(continued in my next post...Please comment and let me know what you think of this post!)