Day 58 Information research

Information research

Before we make the decision on purchasing goods or services, we may want to make a research on relative information. It becomes the most important figure for us to assess the quality and the price of the product. However, every search itself is a gamble, due to the return is uncertain and there are explicit costs associated with it. Therefore, we must balance the extra cost on gathering the information along with the expected benefit. The harder to search for the information, the more costly the process will be. There are a few convenient techniques, which may dramatically increase our efficiency on product research.

Because the asymmetry information, we have no idea about the real quality of the products on sale. So according to the lemon model, we assume all products on the market tend to be inferior. Since the good-quality product sellers are not willing to sell in a defect market, and the poor-quality product seller tends to sell more. Hence to perform a research is crucial for prohibiting us to get inferior goods. As I mentioned above, the searching process can be costly, so we should apply it with the resource that we have the least opportunity cost. That is the application of the principle of opportunity cost or the lower-hanging-fruit method. These resources normally come from our parents and friends. Sometimes their experience in the relative field can be extremely helpful, thus save us a lot of time. Especially, this information has no cost at all. Another information resource is the searching engine on the Internet. Similar to the previous resource, gathering information on these platforms does not incur any cost. In addition, it is convenient to have fully accessed and provide more information. Nonetheless, the major problem for using the Internet is we cannot determine the accuracy of the data. The Internet itself contains much false or deliberately misrepresented information, which can cause confusion and misunderstanding on the product. So in my opinion, we should use the Internet for a broad range research and consulted with the professionals for more detailed matters. These professional individuals or companies are a reliable source of information. For instance, we can inquire about an holiday trip on travel agency, discuss legal issue with a lawyer, and discover the renting terms from the real estate agent. Although this information may be related with a price, it is the information that we can depend on making judgements. However, our request may be refused from these agencies in order to against the free-riders.

In conclusion, we must balance between the amount of information that is sufficient for us to make the decision, and the relative cost initiated by it.