Link: Why is it so hard to buy things that work well?

Dan Luu’s blog post challenges the idea that market efficiency ensures product quality. He argues that factors like information asymmetry and inefficient organizational practices fill the market with inferior products, complicating the purchase of effective goods.

The efficient markets hypothesis, which posits that markets self-correct to eliminate inefficiencies, is critiqued for oversimplification. Luu uses examples from tech hiring, home renovation, and consumer electronics to illustrate long-standing inefficiencies.

Significant information asymmetry prevents consumers from making informed decisions. This issue is compounded by unreliable expert advice and opaque markets, especially in B2B sectors.

Luu questions the conventional wisdom of outsourcing, highlighting frequent poor outcomes despite choosing top-tier vendors. He uses case studies like Amazon's shipping solutions to demonstrate companies sometimes need to develop in-house capabilities.

Organizational inefficiencies and cultural factors also impede quality. Luu criticizes businesses that blindly adhere to focusing on core competencies without considering practical outcomes, contributing to poor product quality.

Luu concludes most markets resemble a "market for lemons," where distinguishing between good and bad products is challenging due to pervasive information asymmetry. This environment necessitates a change in how quality and performance are evaluated and prioritized in the market. #

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Yoooo, this is a quick note on a link that made me go, WTF? Find all past links here.