http://www.technewsworld.com/story/54380.html

            In his article, “Information Asymmetry: Shattered by Technology”, Theodore F. di Stefano gives some general information about how you, as a buyer, can avoid getting ripped off by instances of asymmetry of information. In terms of the auto market, healthcare, trading stocks and getting a mortgage, his central argument is that the best way to correct this asymmetry of information do this is to do research by the internet. For purchasing a car, he says that certain websites, such as vehix.com and edmunds.com, provide absolutely all the information that one could need about any type of car that you could want. These sites can be used to find information about both the new car and the used car market. Next, in relation to healthcare, doing some research beforehand on the internet can help make you a more informed patient and can help you and your doctor come to a rational and safe solution to your health problems. Mr. di Stefano brought in the results of a study concerning a condition that he has, a study that his doctor had read, and so the two were able to work out a good treatment for Mr. di Stefano based on this study. Third, there is an excellent example of information asymmetry in terms of the stock market. If you have money in the stock market, a stock broker will sometimes tell you to keep your money in the market when it would actually be wiser to take it out. The broker might also lie about the quality of certain stocks, telling you to invest in some companies that just aren’t worth your money. Doing research online about stocks is easy and can help make you much more informed when you talk to your stock broker, and can prevent you from losing your money. In Mr. di Stefano’s last example about mortgages, he says that banks often try to take advantage of mortgage purchasers. He gives a description of a site called lendingtree.com offers the mortgage prices of various competing banks to the purchaser so that the purchaser can make a more informed decision.

In class, we discussed information asymmetry in relation to the used car market. In this example, the buyers’ personal values for purchasing a good car versus a lemon in relation to the sellers’ minimum prices that they would be willing to sell their car would determine whether the car was sold. The problem was that the buyers would not know whether the car was a lemon or not but the sellers would, leading to an asymmetry of information. With the boom of the internet in the past decade, anybody can find the information that they are looking for in just a few clicks. This means that the opportunities to have the upper hand in a transaction because of information asymmetry are diminished because the buyer has a lot more available information. In addition, the “sellers” know that more information is available, so this forces them to play more honestly, which is good for the consumer as well. Of course, none of this will mean anything if you are not willing to do a little bit of research beforehand. If you don’t, you could be on the short end of such an asymmetry which could cost you a lot of money later.