YES! TOPICS 2018

Transactions via the Internet – How Can Trust be Built?

 

 

This challenge was introduced by Rebekka Rehm and Clemens Recker, researchers at iwp Institute for Economic Policy at the University of Cologne.

 

For transactions to take place, the market players involved must have a minimum degree of confidence in the respective exchange partner. Only if someone is confident that he or she will receive the desired product or service in a satisfactory quality they will agree to the transaction. That is not to be taken for granted! There are many situations in which one side of the market has more information than the other.

 

A well-known example from the economic literature is a second-hand car market, where buyers cannot identify a car’s quality easily. In the course of digital transformation, this problem seems to be aggravated: Buyers and sellers often remain anonymous. In most cases, there is at least no personal contact that could help building trust. Therefore, it is worth taking a closer look at the solutions that have emerged in the digital world: What do they look like and how well do they work? What other solutions are imaginable?

 

Recommended literature

 

Roth, S. J. (2016). VWL für Einsteiger (5. Auflage). Kapitel 6: Asymmetrische Information, S. 190-199. UTB.

 

Bolton, G., Greiner, B., & Ockenfels, A. (2013). Engineering trust: reciprocity in the production of reputation information. Management Science, 59(2), S. 265-285.

 

 

G. A. Akerlof: The Market for Lemons: Quality Uncertainty and the Market Mechanism. In: Quarterly Journal of Economics. Band 84, Nr. 3, 1970, S. 488–500 mit Link auf http://www.jstor.org/stable/1879431

    Region West

    YES! 2018 Region West

    Academic Partner

    The Institute for Economic Policy was founded in 1950 as an independent, economic research institute at the University of Cologne. Its founders were Prof. Dr. Alfred Müller-Armack, who had developed the concept of a social market economy (“Soziale Marktwirtschaft” in German), and Dr. h.c. Franz Greiß.

    The primary objective of the Institute is the research of current key issues of economic policy. The focus lies on problems of economic policy rules (including the concept of “Ordnungspolitik”) and a regulative framework necessary to uphold the social market economy.

    The iwp is partner of the YES!-Young Economic Summit in 2018.