Before understanding the thesis of screening we need to understand the basics of asymmetric information. Assuming that A wants to sell a car that he values at Rs 5000. B is looking for a car and would consider A’s car worth Rs 6000 if he knew as much about it as A knows. An exchange would benefit both B and A but it might not take place because of an information problem. A probably knows a variety of things about his car that might not be obvious to a buyer. But how can B trust A to tell him all that he knows when A has the incentive to misrepresent the quality of the car?
The potential transaction as described above has the problem of asymmetric information, which simply means that the information available to buyers is different than the information available to sellers. Information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. We are interested in this problem because we see it in many different situations and because it may lead to a market failure, a case in which a market is economically inefficient. However, when there is unexploited value, buyers and sellers have an incentive to find ways to capture that value. Sellers with high quality products need ways to signal the quality of their products so that buyers can distinguish between high-quality and low-quality products. Buyers must find ways to screen out erroneous information but allow in truthful information. For purposes of screening, asymmetric information cases assume two economic agents, which we call, for example, A and B where A knows more about himself than B knows about A. The agents are attempting to engage in some sort of transaction, often involving a long-term relationship. The “screener” (the one with less information, in this case, B) attempts to rectify this asymmetry by learning as much as he can about A.
Screening, which is an attempt to filter helpful from useless information, is an action by those with poor information. When two people go on a blind date, both are unsure if they are compatible, so both are screening, listening and watching to learn if the other person is someone with whom they would want a second date.
When there is asymmetric information in the market, screening can involve incentives that encourage the better informed to self-select or self-reveal. For example, a job with a low-paying probationary period will discourage those who know they are not well-suited for the position from applying. People who are confident that they will survive the probationary period are more likely to find the offer attractive than those who doubt their ability. A lender who demands collateral for a loan discourages applications from those who doubt their ability to repay.
In conventional marketing there is a need for good signalling for eg, to make the customer believe in your quality you have to justify by giving a warranty for a specific period. However since in Social media marketing, everyone is always looking for information from various sources, screening play a very important role in eliminating irrelevant information and making sure that the person can get the relevant information as required. Hence for a brand or company to be successful on social media, it should be able to withstand screening.