Asymmetrical Information and Adverse Selection Effect in Service Interaction

In the open-end production system, production service of high-quality should be the product of effective interaction involved by multi-parties. Yet in fact there is critical asymmetric information between all the parities, the service providers and customers in particular. By applying the game theory and relevant knowledge in Information Economics, this paper builds a game model between service providers and receivers and analyzes the adverse selection effect during service interaction under asymmetrical information. It further proposes to set up a visual service standard system and then demonstrates the reasonableness in introducing third parties like the government, trade organizations and consumer associations and puts forward corresponding policies and suggestions.