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Information asymmetry is a major problem in the ascending online auction. This research conducted two studies to investigate the impacts of information (positive or negative) and its acquiring cost on information premium and final price. In study 1, 113 undergraduates were randomly separated into two groups. Group 1 was given positive information (i.e., a report showing the strong demand for MP3) and group 2 was given negative information (i.e., a report showing MP3 has a defect in its configuration). The test result indicated that there is a significant difference in the information premium resulting from positive and negative information. In study 2, the test outcome showed that, no matter what information (positive or negative) was given, high acquiring cost will lead to a relatively higher final price, compared to low or zero information acquiring cost.
Date of Conference: 9-12 Dec. 2008