A Research On Asymmetric Information In Internet Exchange

With the development of Internet, there appears to be a new exchange model internet exchange. This exchange model broke the limit of time and region of the traditional exchange, to adapt to the trend of coordinate development of the different regional economy, to promote the goods circulating in a cross virtual market, to rise up the efficiency of goods exchange. Since 2003, the internet exchange market has entered to a boom period. By the end of June 2010, the numbers of internet exchange participants have rose up to 142 millions,and its utilization ratio has rose up to 33.8 per cent by 5.7 per cent, and the amplitude of the participants has reached 31.4 per cent. With the new exchange model been introduced into our live, the problems caused by asymmetric information were got the increasing attention by people. In process of internet exchange, the two parties– buyers and sellers– have located in different space and time, which lead to the problems of asymmetric information. Adverse selection and risk of honesty become the focus to which people pay attention. Nowadays, we have carried out a series of controls against these problems, for example: the classification of honesty, reserves system, and real name system. Although these regulations could play a role of guaranteeing the health and high speed development of the internet exchange market, we used to neglecting the abilities of the market owns.This paper Analyzed the internet market exchange with our country's characteristic. Then using the information economics model of game theory, this paper established KMRW reputation model of internet exchange market in the condition of incomplete information to research the effect of asymmetric information. The research of this paper contributed to promote the development of our country's internet exchange market. First sector is the introduction, which introduced the background of internet exchange market and the latest research results of academician else. This sector contained the research background, the research method, and the summaries of foreign documents, the summaries of domestic documents, creation and deficiency. Second sector analyzed the characteristic of internet exchange market. After comparing the internet exchange with traditional exchange which dependent on real market, it turn out the characteristic of internet exchange. This paper found out the reasons of asymmetric information, and pointed out two manifestations of asymmetric information of both online store and goods in the internet exchange market. Third sector researched the adverse selection in the internet exchange market, to establish game models, to analyze the reasons and effects of adverse selection, and to analyze the measures which we carried out prevent the internet exchange market from adverse selection and its effects. The last sector of this paper tried to turn out the regulative system of the market itself, to establish the game model in the condition of the incomplete information– the KMRW reputation model, and found out the initiative force of the market that could limit the actions of sellers. In the internet exchange market which included rational sellers and irrational sellers, the rational seller have incentive to disguise themselves as the irrational sellers for a long-run profits. Even if in a finitely repeated game, the speculative sellers also played an honest role. The results of KMRW reputation model changed the opinions that only emphasized on the external force, and supported the new notion– emphasizing on the factors of market itself.