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I strongly disagree with the assertion that gaming is a lemon market. The information asymmetry doesn't exist and I think the analogy is flawed in this case. T

I strongly disagree with the assertion that gaming is a lemon market. The information asymmetry doesn't exist and I think the analogy is flawed in this case. The key part of Akerlof's used-car market is the information asymmetry that exists for every instance of a car. Two caryards may have the exact same year/model/colour of Toyota camry. One has no serious flaws and is priced at $1000. The other is priced at $500 but has lots of hidden problems and is a real lemon. To the consumer they look the same, and the logical choice is the $500 car. The $1000 car never gets sold. This is the lemon market in action. Software is different because when you sell 100k units of software, its a reasonable assumption to believe that all of these 100k units are the same piece of software[1]. A game being reviewed, or upvoted on reddit, or aggregated on metacritic - this is the same software I will recieve if I choose to purchase it. Thus there is no information asymmetry. If anything, the market has become better in this regard. It is easier now to choose a high quality game. When I was a kid, and lucky enough to have enough dollars in my hand to purchase a video game - I had to make my decision based on the cover art of the SEGA cartridge. Perhaps if I was lucky I would have some entirely objective (cough) information from the Official SEGA Magazine. [1] Yes, some people will experience the game differently because of device compatibility issues, but that information is also shared (ie Google Play filters reviews by people with the same device as you).

belorn 13y ago
The argument you put forth has already been done against the case of used car salesmen/saleswomen. The argument is that those people rely on reputation to sell successfully, and thus reviews from previous buyers will fill in the gap of information asymmetry to new buyers. If the customer collects the critical information about the product from other buyers before purchase, information asymmetry can always (even with used cars) be removed. However, the buyer must also in practice be able to assess the value of a product through examination before purchase. If consumers in the general case do not inform themselves by reviews and shared customer experience, information asymmetry will happen. So when a game is released with horrible user reviews or below working condition, they still tend to sell perfectly well. Even in cases where the developers themselves has admitted the poor state and given refunds, the games sell perfectly well. In a world with information asymmetry in games, Simcity and Rome 2 can be commercial successes, and even Ride to hell sells copies. If you believe that there is no information asymmetry in games, how do you explain the discrepancy between reality and theory?

belorn 13y ago

The argument you put forth has already been done against the case of used car salesmen/saleswomen. The argument is that those people rely on reputation to sell successfully, and thus reviews from previous buyers will fill in the gap of information asymmetry to new buyers. If the customer collects the critical information about the product from other buyers before purchase, information asymmetry can always (even with used cars) be removed. However, the buyer must also in practice be able to assess the value of a product through examination before purchase. If consumers in the general case do not inform themselves by reviews and shared customer experience, information asymmetry will happen. So when a game is released with horrible user reviews or below working condition, they still tend to sell perfectly well. Even in cases where the developers themselves has admitted the poor state and given refunds, the games sell perfectly well. In a world with information asymmetry in games, Simcity and Rome 2 can be commercial successes, and even Ride to hell sells copies. If you believe that there is no information asymmetry in games, how do you explain the discrepancy between reality and theory?