Islamic Economics

Islamic Economics

Identify the consequences of information asymmetry in online markets and provide solutions based on Islamic teachings: a method of qualitative analysis

Document Type : Original Article

Authors
nafiseh salehnia 1
mohammad mahdi nasr harandi 2
1 Tarbiat Modares University
2 Cyberspace Research Institute
Abstract
In recent years, e-commerce has developed rapidly and many transactions are made through websites and applications. According to asymmetric information theory, one party (buyer or seller) usually has more information than the other party in the transaction, and this causes loss of one of the two and disrupts the efficiency of the market. The problem of asymmetric information in online markets seems to be greater than in physical markets. In physical markets, the buyer and seller or their representative are physically present in the transaction; In online commerce, on the other hand, buyers and sellers do not have a physical presence, even at the same time. Asymmetric information in these transactions can be related to the identity of the buyer and seller, the quality and quantity of the product, price, payment operations, delivery, contract obligations and so on. Because of the importance of information symmetry in market efficiency, online marketers try to reduce asymmetric information in a variety of ways. In the present article, content analysis of the experiences of users of online markets for second-hand goods shows that asymmetric information has many negative consequences. Analysis of Islamic texts also indicates that in Islam there are rules to eliminate or reduce information asymmetry, which if used in the regulation of Internet transactions can greatly reduce the negative consequences. Online trading intermediary platforms should have a supervisory role in transactions and judge in accordance with Islamic law in cases of dispute in order to increase the efficiency of transactions and prevent one party from being deceived.
Keywords
Asymmetric information
Islamic teachings
E-commerce
Online market
Second hand goods
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