Developing the Digital Economy: Overcoming Institutional Constraints and Unravelling Information Asymmetry

Abstract

The purpose of the study is to identify ways to reduce the risks faced by economic agents in interaction with institutional traps caused by information asymmetry in the developing digital economy. To achieve this goal, the author applies a structural approach based on the following methodology. An analysis of the foundations of uncertainty and rationality in the digital economy is conducted, and then the risks associated with falling into institutional traps due to information asymmetry are investigated using the labor market as an example. The final part of the paper considers ways to mitigate these risks. The practical significance of this study is to identify the possibility of falling into institutional traps due to information asymmetry using the labor market as an example. In the context of the digitalization of the education market, the study shows that a higher education diploma cannot be a reliable signal of a potential employee’s future productivity. The importance of this study in the social aspect is the need to create an electronic platform containing digital portfolios of potential employees formed in the process of education and subsequent labor activity. This will help to reduce information costs for employers and avoid the institutional trap of being tied to a higher education diploma. The author suggests ways to increase the target rationality of economic agents in the context of growing information asymmetry in the digital economy.