The adverse selection problem of second-hand market in network transaction

Intermediary transaction SEO diagnosis Taobao guest Cloud host technology Hall

Adverse selection is one of the most common economic terms in the second-hand commodity trading market, which refers to the inferior expulsion of high quality products due to asymmetric information and market price decline, which leads to the decline of the average quality of market transactions.

In the market transaction, the reason for adverse selection problem lies in the asymmetric information of the buyers and sellers in the market, which causes the buyers and sellers to make the choice which is unfavorable to the high quality commodity trading, and leads to the low efficiency and the vicious circle until the market shrinks. Akerlof the process and reason of the reverse selection problem in the old car market: In the old car market, there is asymmetric information between the established sellers and those who care about the quality of the old car, and the seller knows the true quality of the car, and the buyer doesn't know it. Under the premise that he cannot ascertain the intrinsic quality of the vehicle being purchased, the price he was willing to accept would only be an average of the value of all old cars on a probability-weighted basis, and would only be willing to pay the price based on the average, but in this way sellers with a higher than average quality would exit the market, with only a low quality. In other words, only low-quality old cars are sold, and there is no high-quality old car trade, the result is that low-quality old cars will be high quality old car extrusion market. Akerlof explains why even once-used new cars are hard to sell in the market, which is the inevitable result of "adverse selection", which is forced to make a reverse choice because of the information disadvantage of consumers. This process continues, all the better quality of the old cars will disappear from the market, so the market is left with inferior cars. This is for the traditional market to analyze, and in the virtual network trading market, information flow and dissemination of speed, to a certain extent, should be to solve the problem of adverse selection of a great help. In fact, in the second-hand market of virtual network transaction, the problem of adverse selection has not been eliminated, but it is more prominent.

The reasons for the adverse selection of the second-hand trade market in net purchase

1. Serious asymmetry of information

Asymmetric information refers to the different information that is possessed by different parties in the market, that is, some participants have information, while others do not own the information, or if one party has more information and the other party has less info. Asymmetric information is one of the main causes of market failure, its existence has seriously affected the efficiency of the market and hindered the trade of second-hand goods. The information on Taobao is massive, although online trading provides traders with powerful information-searching capabilities that can get thousands of messages in a very short time, but people have limited information-processing capabilities, It is impossible for a buyer of limited rationality to facilitate all information and decision options in the process of purchasing decisions in a networked environment. The great richness of information does not imply the appearance of symmetrical information environment, the rich information in network environment greatly reduces the asymmetry of information, but it enlarges the asymmetry of acquiring information ability of both parties. But it increases the asymmetry of the ability of both parties to acquire information. I bought a second-hand mobile phone in Taobao, browsing Taobao business information, I saw all the introductions are eight or nine new, good performance, more functions. In discussions with the sellers, although the seller has not been touted how good his machine is, but also are some absolute guarantee of quality, the machine with the picture and description of the direction. But when I bought it, I found that the phone's shell and keyboard were worn out and the function was OK, but there was something wrong with the battery. Obviously I was a bit cheated, this is caused by asymmetric information.

2, the network environment lacks the transmission notional quality information the way

Under the network environment, the quality of goods is not easy to detect, the real quality of the goods can not reach the buyer's expected level and it is easier for the buyer to satisfy the goods department. The network environment of products mainly in two aspects of testing: product surface information and merchandise material information. Although the second-hand market powerful information dissemination and retrieval function greatly enhances the transmission surface information efficiency, but the fictitious transaction environment lacks delivers the material information to the buyer the way, but this is also the buyer to inspect the product quality the most important way. Due to the lack of the online second-hand trading market, the buyer's access to the quality of goods has formed the uncertainty of the buyer's quality.

3, the network environment sellers do not keep good faith opportunity cost low

In the network environment, the seller's fraudulent behavior damages the buyer's legitimate interests, such as Taobao's seller's "Brush credit" behavior.

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