Adverse selection in online education

In 1970 George A. Akerlof published, in the Quarterly Journal of Economics, the very famous paper "The Market for Lemons: Quality Uncertainty and the Market Mechanism". The real innovative concept illustrated in that paper was the analysis of the market mechanisms in presence of informative asymmetries on the quality of products: because of a potential adverse selection, i.e. the risk of interacting with people that maybe do not own products with the required quality, less informed people avoid the exchange; eventually, the market will suffer from a sub-optimal number of transactions. According to the economical theory, the attempt of this paper is to analyse the "sensitive" information in online education, in order to overcome the market failure. The approach adopted in this paper is therefore a micro-economical one. Through a wide sample of potential users, we identify the signals that are perceived as "sensitive" for choosing an on-line course, with special focus on the quality issues of the courses.