Do weblogs reduce information asymmetry? This year's Economics Nobel Prize was awarded to work that described how information asymmetry (usually sellers knowing more than buyers) can cause buyers to pay only the lowest price (to avoid getting ripped off) and so destroy the market. We are all suspicious of used car salesmen because we think they're trying to sell us lemons.

Software is a lot like used cars because it 1) mostly sucks and 2) is hard to value before buying and using it.

Weblogs are one way to look inside the development process and figure out how good a package is before shelling out your hard-earned. Joel Spolsky's excellent weblog tells me more about his company's bug tracking software and upcoming City Desk product than anything else, except many a trusted friend's evaluation. Weblogs should help small developers signal the quality of their products to potential buyers.

(Update: Just heard from Joel. He tells me that "pretty much ALL [their] software sales are either people who read the weblog, or word of mouth from people who read the weblog." Good to hear.)

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