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Online Trading and Adverse Selection in Smartphone Market

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  • Fulgence Dominick Waryoba

Abstract

Information asymmetry that dominates almost all market operations deters market performance and in some markets may lead into non-existence of market due to adverse selection problem. This paper hypothesizes that online trading reduces adverse selection problem in Smartphone market. The findings show that high quality Smart phones sell more than low quality Smart phones. Therefore, trading online induces signaling which reduces the problem of information asymmetry thereby offsetting adverse selection problem.

Suggested Citation

  • Fulgence Dominick Waryoba, 2018. "Online Trading and Adverse Selection in Smartphone Market," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(4), pages 96-101, December.
    • Handle: RePEc:khe:scajes:v:4:y:2018:i:4:p:96-101
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    References listed on IDEAS

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    More about this item

    Keywords

    Information asymmetry; adverse selection; signaling;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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