Reducing information asymmetry and building trust in projects using blockchain technology

Abstract

The success of every construction project is highly dependent on effective communication and trust between key project participants. It is assumed that all participants in the project will work smoothly together to complete the project. Nevertheless, according to the principal-agent theory, there is information asymmetry between project participants because they also have their own self-interests. Information asymmetry is the situation in which one of the two parties is better informed than the other. Due to complexity of construction projects and the number of participants involved, implementation of blockchain technology would reduce information asymmetry. This paper provides a framework for implementation of blockchain technology in construction projects so as to reduce information asymmetry and enhance trust between project participants. Blockchain technology ensures that all project participants have access to all the information exchanged between them over the duration of the project, and thus helps in developing a more trustful relationship between them.