TRANSPARENCY IN INFORMATION MARKETS

This study focuses on the effects of market transparencies on consumers’ perceived value of information. Information goods have two key special characteristics: they are experience goods, and they are often given away for free. The study implements three transparencies related to market goods – cost, operational, and price transparencies - in an experimental information market to examine their effect on the perceived value of information goods. Perceived value is assessed by willingness-to-pay (WTP). The research method is a controlled experiment including preliminary questions, a visual vignette depicting a health app and two value elicitation questions. Three groups of participants were exposed to each transparency form when price is not known. When cost transparency is applied, participants are more likely to download the app. Operational transparency has no effect on information goods. Price transparency diminishes the perceived value of the information good (WTP changes by -61.8%) and participants are 80% less likely to download the app. When users received cost information related to a free information good, the perceived value of that good increased by +122.7% compared to the control. Operational transparency did not produce a statistically significant difference in WTP. The combined transparencies produce WTP which is higher than for operational transparency alone, but lower than for cost transparency alone. Overall, in the case of information goods, cost transparency enhances value perception while price transparency diminishes it. To date, cost transparency is rarely practiced in information markets. The current results suggest that the cost of producing information should be visible to information consumers. The lower combined effect of cost and operational transparencies may be indicative of information overload and the diminishing value of additional information.