Lemons problem in collaborative consumption platforms

Abstract

Purpose Most of the research on collaborative consumption platforms (CCPs) has focused on motivational drives, and little research has been conducted on the problem of unbalanced information sharing, also known as the “lemons problem,” and signals. The paper aims to discuss these issues. Design/methodology/approach This study conducted a netnography and an experiment. Findings The netnographic study showed that participants tend to use low ratings and negative reviews as cues implying more searches, use ratings as an anchor to adjust other information, and employ differing cognitive information-processing styles. The experimental results show that, in a normal environment (when ratings are high), visualizers (verbalizers) have more of an intention to use CCPs when they are exposed to abundant pictures (textual cues); however, when the cues lead to a further information search (when the ratings are low), this search behavior pattern is reversed: visualizers (verbalizers) have more of an intention to use CCPs when they are exposed to abundant textual cues (pictures). Research limitations/implications This study extends previous research by showing that people frequently use differing heuristics depending on the context; that ratings have an anchoring effect and guide people in selecting a signal to use and condition how they use it; and that visualizers prefer text cues to pictorial cues when trying to make informed decisions under a condition that points to a further information search. These results are opposite of previous assertion. Practical implications Marketers are advised to provide a mechanism by which users can extract the cues they need and reduce the less urgent ones; devise a mechanism that screens participants and divides them into two categories: those who post honest evaluations and those who do not; and reduce the opportunistic behaviors of partners on both sides. Originality/value The current study addresses consumers’ use of information posted by other consumers on CCPs and demonstrates that participants use low ratings and negative reviews as cues implying more searches, use ratings as an anchor to adjust other information, and employ differing cognitive information-processing styles. Previous research rarely addressed these information search behaviors of consumers on CCPs.