Does the Internet help reduce the asymmetric information problem?
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Thanks to the Internet and all kinds of online resources, consumers can now use asymmetric information for their advantage. For instance, buyers can research insurance rates, car prices, and restaurants and hotels online and learn a lot about what other consumers say about these businesses. In the past, these buyers had much less information to use when judging the qualities of goods, services, or companies.
At the same time, however, this advantage is a double-edged sword, because companies profit from the Internet too, as they use online resources to develop informational advantages over consumers. For instance, companies can now use online research tools such as “cookies” to determine the viewing behavior and the “clicking” habits of consumers, and thus develop marketing campaigns to take advantage of carefully sourced consumer habits. Discuss.