George Akerlof, Nobel prize laureate for Economics in 2001, found out something consumers are confronted with rather often: How do you know if product X is OK, or, as Akerlof puts it, not a “lemon”? Take, for instance, the purchase of a used car. The chap who wants to sell the used car most likely knows more about it – if it had a previous accident, for example. This is an "asymmetric" market situation which is solely based on information – the party which has more information can skew the information and thus the prospective sale for his advantage. But you as a prospective customer know that, therefore you are suspicious when you buy a used car. That again makes it more difficult to sell it.
When this kind of situations occurs, one way to go about is “market signalling” which was described by Joseph Stiglitz: you inform the market about your product. You can also try to elicit information from the seller and other sources to know more about your potential risk. When you check a used car, you open the hood and look for suspicious leaks; you open and shut the door and listen if it sounds right.
But do you know what is going on in the car engine? Or in your computer? Couldn’t there be malicious programs running which record everything you do just to send it to your competition? Isn’t there the danger of viruses, worms and Trojans everywhere?
We realize via our senses. But we think that they don’t help us in checking out the complex machinery and intricate systems we surrounded ourselves with, while our way of making sense is the same our ancestors, the cave people, used. This way of making sense is still working quite well with many products - things you can smell, chew, taste and touch, for instance. Such as cheese.
But we get cheese tightly wrapped with extruded and laminated plastics.
If we don’t want to become paranoid, we have to afford a minimum of trust in our transaction partners that what we want is what we get. In historical terms, it afforded much less trust to go to an old-style grocery than it does to go to a supermarket. Every supermarket visit is an act where we need to afford a great deal of trust into what we might get when we buy this particular toothpaste or that particular cheese.
The signaling of a product has undergone interesting semantic changes. Just a generation ago, there was a simple way to find out if a product such as cheese was OK or not - you took a sample and smelled and tasted it. Now you watch a TV ad and buy a branded, packed cheese, and only at home you will be able to taste it. You cannot compare different cheeses by what would make sense - its taste, but by a replacement signal: its brand and packaging.
So an important, and problematic, aspect of design is mediation - to mediate between what you as a consumer don’t know and what the seller wants to make known. These can be very different things, of course, and in that respect, design can also be an ideal device to cover up.
Passage from de_sign, lecture by Mario Gagliardi at London Business School, January 25th 2002, updated May 24th, 2009.
