CAR CHECK Trading SOFTWARE START UP

1. The Market for Lemons, Transparency and the Car-Check-App

For now more than twenty years I attempt to sell excellent quality used cars as an automobile trader. These high quality cars are called in the US “Cherries”. But I observed that the better the quality – going along with a higher price – the harder it was to sell them. I even tried to improve the quality and the services included, but with an adverse effect. On the other hand, selling such cars where any effort to improve their technical and visual condition was more or less senseless, was pretty easy. I wondered why private customers and professional dealers preferred cars of uncertain technical condition, probably expecting defects and problems – these cars are called “Lemons” in the US. Was it only, because they were so much cheaper?

Going along with a kind of desperation I couldn’t find an answer to this question for a long time.

Years later, after a hard day in a more or less sleepless night, I grabbed a good book to read a bit. It was “Who Owns the future” by Jaron Lanier the philosophy writer and computer-pioneer. Eyes wide open I found a note referring to a paper of an American economist. The paper detailed that a buyer of any used car suspects that the seller knows more about its condition than he admits. That is called “asymmetry of information”. This uncertainty causing the buyer to revise downward their expectation and automatically pay less. That’s a protective automatism in the buyers mind which we know as “experience of life”. The name of the paper was: “The market for Lemons – quality uncertainty and the market mechanism” by David Akerlof. For the description of this phenomena in economic-psychology Akerlof was awarded with the Nobel-Prize in economics.

Now I could understand the mechanism behind my desperation. I was a victim of the “Dilemma of the Lemons”. In order to overcome the asymmetry of information and therewith the dilemma you should provide a maximum of transparency. Then seller and buyer will trust each other finally. Only a truly transparent form of Information will reduce the fear of Lemons in the Car-Re-Marketing.

The idea of the Car-Check-App was born.

2. Archimedes’ chimpanzees – The political question

It was one of these interesting BBC reports shown on ARTE-TV in the late evening. The report was about biological evolution. Japanese researchers from the Kyoto University created an intelligence test for chimpanzees. One part of it was: can chimpanzees count from one to nine in the right order?. The numbers from one to nine were displayed simultaneously but at very different places on a screen. The numerals were flashed for only a second and were covered then. Could a chimpanzee remember the place where the numerals were and still get the order they were in right? Yes, the chimpanzees could, and more than that, they could do it extremely quickly and easily. Now the test was repeated with another primate species – a human. The result: the humans busted almost every test and if they passed, they were extremely slow. Result of the research: Chimpanzees are real mathematicians – the sons of Archimedes? They could solve mathematical problems with their “System 1” – referring to the psychologist Daniel Kahnemann – which is the fast, instinctive and emotional part of our mind. Whereas Homo Sapiens prefers to use the “System 2” of his mind, which is much slower, more deliberative, but more logical. So we have to conclude that the chimpanzees are the better mathematicians? Wow, a real smart result of evolution. Can this be real?, … the Japanese researchers were asked at the end of the report. The answer is: “NO”. Performing the same test, humans and chimpanzees actually do different things. The human brain switches automatically to its “System 2”, because it is conditioned in that way that the human has to solve a difficult math problem. The chimpanzee does something different. He has to assess a situation, comparable to, when he is watching two trees with chimpanzees from two different packs (families / tribes). To figure out, if the situation for him is dangerous or not, he has to analyze the situation. With his instinct – “System 1” – he “counts” and assigns which chimpanzee in which tree is friend or foe. What the chimpanzee does is: answering a political question.

I was wondering; did cultural development and education lead the humans to prefer their “logical system” of mind? Is there a tendency to disregard our intuition which was conditioned during the successful evolution of man?

Shouldn’t we trust that part of our mind which we can not turn into words, knowing already that it will create the better result?

Was “Mr. Spock” perfect?