Information strategies to support full information product pricing: The role of trust

Abstract

In this paper we report on the importance of trust in the development and operation of distribution networks that attach non-price information to products to mitigate market dynamics introduced by information asymmetries. Often this non-price information is transmitted from producers to consumers through trusting networks or under certifiable labels such as"organic" or "Fair Trade." We are calling such networks Full Information Product Pricing (FIPP) Networks. This study is part of a larger project aimed at understanding how a suite of future-possible data interoperability standards and social computing technologies will set the stage for a set of product labelings, information architectures and policies that may have the potential to supplement a compliance-enforcement approach with a more market-based voluntary approach to significantly expand the share of worker- and environmentally-friendly products within the NAFTA region. This initial exploration of four cases in Canada and Latin America indicated that trust, in the forms of institutional trust, calculative trust, and relational trust, plays key roles in FIPP operations and expansion. It is critical for building collaboration, coordinating network activities, and mitigating the risks associated with information asymmetry.