A Conceptual Framework of Blockchain for Reducing Information Asymmetry with Simulation-based Validation
DOI:
https://doi.org/10.46610/JPLACMS.2026.v07i01.005Keywords:
Agency theory, Blockchain, Distributed ledger, Financial markets, Information asymmetry, Signaling theory, Smart contracts, TransparencyAbstract
This study adopts a conceptual modeling approach supported by simulation-based validation rather than real-world empirical data. Information asymmetry, characterized by unequal access to relevant data among market participants, often results in inefficiencies such as adverse selection, moral hazard, and, in extreme cases, market failure. To address this issue, this paper develops a comprehensive theoretical framework that integrates insights from signaling theory, agency theory, and information economics to analyze blockchain’s role as a mechanism for enhancing information symmetry. The study conceptualizes blockchain as an institutional substitute for trust, enabled by its core features: decentralization, transparency, immutability, and real-time verification. These attributes are expected to reduce reliance on traditional intermediaries through three key technological mechanisms distributed ledger systems, smart contracts, and consensus protocols that function to enhance data reliability, enforce contractual obligations, and ensure agreement across network participants without centralized authority. By reducing information gaps and increasing the credibility of shared data, blockchain technology has the potential to curb opportunistic behavior and align incentives among stakeholders. The paper further advances a set of testable propositions that link blockchain adoption to measurable economic outcomes, including improved market efficiency, lower transaction costs, and increased firm valuation. These propositions provide a basis for empirical validation and future quantitative research. Overall, this study contributes to the existing literature by bridging technological innovation with established economic theory. It offers a unified analytical model that not only explains how blockchain can alleviate information asymmetry but also highlights its broader implications for financial market performance and institutional design.
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