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Submit this assignment according to the instructions provided in the module. Chapter 10: Ebay (Case Introduction) The eBay case takes an interesting look at auction markets and contracting. When you...

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Submit this assignment according to the instructions provided in the module.

Chapter 10: Ebay (Case Introduction)

The eBay case takes an interesting look at auction markets and contracting. When you think about this case think about it from eBay’s perspective. What is eBay’s value proposition? To me, eBay has created a market to exchange goods and their value proposition is that people can feel comfortable exchanging those goods for monetary payouts as they transact through eBay. In Brickley, Smith, and Zimmerman XXXXXXXXXXthe authors discuss reputational concerns and from my perspective, I feel that eBay needs to focus in on the following three points, in regards to contracting costs, to maintain its market position: (a) make sure that the benefits of cheating are small, (b) have a system that has a high probability to detect cheating, and (c) impose significant penalties if someone is cheating. In general, this case is about creating trust through contracting; therefore, you will want to write a little bit about asymmetric information and using contracts to avoid misrepresentations.

Answered 5 days After Jun 06, 2022

Solution

Ayushi answered on Jun 11 2022
84 Votes
EBay Case Study
Contents
Asymmetric information:    3
Use of contracts in order to avoid any kind of misrepresentations:    3
References:    5
Asymmetric information:
A term which is used in place of asymmetric information is information failure. It takes place when more information or we can say that a large amount of information which is material in nature is provided to a party in comparison to other users of such information. This is particularly seen in the economic transactions where we can say that the information that the seller has is more material in comparison to that which is provided to the buyers. Asymmetric information has both pros and cons. Sometimes it provides advantage to certain people whereas on the other hand some people may face losses due to lack of information ("Asymmetric Information", 2022). It has certain advantages like its good for the market economy and on the other hand it also has its own disadvantages like adverse selections done in case of insurance companies. In this case eBay has used asymmetric information which turned out or resulted in adverse selections. The company should adopt the asymmetric information...
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