Respond to each classmate 100 words a piece Classmate 1 Adverse selection occurs when buyers have more information than sellers about the market and this disturbs the usual market process .In such a

Respond to each classmate 100 words a piece 

Classmate 1 

Adverse selection occurs when buyers have more information than sellers about the market and this disturbs the usual market process .In such a situation firms will not like to sell their goods as it is not profitable.

Amazon occupies a important place in the online market and so it will try to solve the problem of adverse selection which can tarnish their image .In order to reduce the problem of adverse selection Amazon wants to keep non performing sellers from market place as it will affect the market adversely. When consumers are not satisfied with one seller , it will have a bad impact on all sellers in the market. Amazon can stop fraud behavior by discouraging reviews which are generated through payment or free byes. Amazon can device means to identify counterfeit reviews. Again Amazon can develop a system which does not give importance to counterfeit reviews and gives more importance to reviews which are not old and will help Amazon in building their image in the market..

Classmate 2 

Adverse selection is “a problem that arises from information asymmetry, or “hidden” information” Frobeb, L.M., et.al (2018). One of the examples of Amazon using adverse selection was with their employees. They followed an example used by a company they acquired, Zappos. This company’s new recruits were trained over a four-week timeframe and covered the company’s strategy, processes, and culture. At the end of their training, the new hires were offered a $4,000 payout to those who quit on that day. The offer was taken about 3% of the time. This strategy was a way to weed out those who would not deliver the WOW for the company. After Amazon acquired Zappos they incorporated a similar program for their new hires. They have also used something similar as they weed out their sellers. They reviewed the customers' reviews of their clients and evaluated which clients would work best in the Amazon Marketplace. The customer's reviews are critical and valuable as we have learned over the years. It used to be word of mouth was considered more valuable than an advertisement. We have learned over the years that social media comments have value for companies. It can cause good and bad consequences. If a vendor has bad reviews, it could reflect a bad on the website hosting it. The sellers for Amazon posted fake reviews concerning their products and items. It was discovered by Amazon and they sued over 1,000 of their sellers for fraudulent representation. They put value in what type of products they offer.