Strategies to reduce information asymmetry in web service market

The web service model provides fundamental advantages compared to the classical software usage model. But transactions in the web service market have by far not reached the expected level. A reason for the tendency of market failure is the verifiable information asymmetry and uncertainty in the web service market. Besides deficiencies on the supply side, regarding configuration, display and communication of web service bundles, the limited web service knowledge of potential buyers are constitutional causes to the modest development and enforcement of the web service model. By the help of strategies derived from information economics the present study elaborates measures to take in order to prevent the market for web based services from failing. The conclusions of an online-based questioning experiment offer strategic recommendations to reduce buyer’s uncertainty in outsourcing decision. Results of the experiment point out the significant positive impact to reduce information asymmetry and transaction uncertainty in the web service market by integrating information substitutes in the web service bundle in order to transform experience and credence qualities into search qualities. It can be verified that web service customers have a higher willingness to pay when information substitutes are integrated into the web service bundle.