Research on the phenomenon of asymmetric information in construction projects — The case of China

Abstract

From the perspective of information economics, asymmetric information leads to opportunistic behavior, which is the primary cause of loss and risk in the construction market. This research studies on the probability and impacts of asymmetric information phenomena systematically and focuses on information asymmetry among owners, contractors and supervisors. This is conducted by inviting construction industry participants in China to evaluate asymmetric information phenomena in project management by questionnaires. The evaluation includes two stages, i.e. bidding stage and performance stage. Risk significant index is used to identify the key asymmetric information phenomena. “Owner's financial condition” and “Owner's ability to pay progress payments” gains the highest score in these two stages respectively. The research helps to distinguish the primary and secondary order of asymmetric information phenomena and improves the efficiency of project management. Principal participants may use it as a reference to prevent and reduce the uncertainty and risk in project management.