Asymmetry of information and the service relationship: selection and evaluation of the service provider

Abstract

The relationship between consultants and their clients is characterized by a considerable asymmetry of information. In this type of relationship, the client is unable accurately to evaluate the quality of the service or advice purchased. The process of purchasing advice (in terms of both selection and evaluation) appears to be very complex, and most existing models seem unsuitable. However, this does not prevent market actors from developing responses to the problems of information asymmetry which characterize the consultancy relationship. Shows that, while these responses are manifested mainly in the form of visible institutions, non‐institutional responses, including personal relations and networks of contacts and co‐operation, are often more important.