Price Information Asymmetry Impact on Optimal Choice - RCBS Market Case Study

The information asymmetry influences the consumer behaviour in an undesirable and unpredictable way. This phenomenon is present on RCBS market regarding the Information on price causing the unexpected consumer behaviour - suboptimal product choice regarding the price and the range of the demanded services. We study this phenomenon to identify main causes and its range. At first we present the main characteristics that increase the information asymmetry influence (low share on household expenditures) but also decrease (close substitution). Then we present the outcome of European Union wide research identifying sources of information asymmetry. Then we describe our data source (RCBS comparison tools), Based on its dataset we compute the share of optimal choices among the electronic banking users of the RCBS. We define the optimal choice as the lowest fees for the account that provides all the demanded services. The result is that the optimal share of the consumer choices of RCBS is as low as shows the confidence interval 95% of (0.159; 0.171). The result is based on more than 14 500 individual consumer behaviour records. For the second analysis the geographical difference variables are filtered off to eliminate geographical differentiation even more. This led to expected improvement in ratio but very low one. The analysis performed on more than 9 500 individual records shows the confidence Interval 95 % of (0.196; 0.213). The result show the information asymmetry has serious impact on consumer's choice due to combination of effects such as search costs and low return on search. At the end we discuss the possibility to remove the possible geographical differentiation bias by removing ATM and exclusive account form the calculation.