In: Economics
**This is for an Economic Analysis of the company Amazon**
What is the role of asymmetric information experienced by Amazon?
Are there issues of adverse selection and/or moral hazard in Amazon?
Are incentives aligned between management and workers?
Asymmetric information plays a very important role in ebusiness . In E-business, sellers and buyers are doing buying and selling at distinct level.
Amazon face a problem of Adverse selection .
When buyers buy a product through online so buyers dont know about the quality of the product and and sellers dont know that buyers will like the product or not so both party have lack of information which leads to adverse selection.
Amazon has also experienced of moral hazard. When buyers buy a product .so after ordering the product ,he is reckless about the product and not very much concern about the product because he know that after getting the product ,if will return the product so he doesn't have to pay anything ,the deducted amount will have to pay Amazon'seller.
For example, a buyers have order 4 products but he only want 2 products out of 4 products . So after delivering the product ,he is reckless and he has fun to return the product because he know that after returning the product, he doesn't have to pay anything but seller's have to pay the returing cost. So his behaviour after getting product is reckless .