QUESTION 3 Companies like Yelp reduce the informed partys x

QUESTION 3 Companies like Yelp, reduce the informed party\'s [x] to exploit.

Solution

Information asymmetry

One can acquire information from countless consumers. This information could be about products ranging from movies to restaurants to physicians. In keeping with the standard information model, the revenues are higher when ratings contain more information. Consumers react strongly to this information. Ratings have a causal impact on revenue. Ratings are correlated with reputation. The impact is larger on independent stores rather than that for retail chains. With portals such as Yelp, there is a shift towards independent chains. The response is conditional on easily accessible information. It is a part of a crowdsourcing movement to reduce information asymmetry. It can be exploited for higher profits.