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The Market for 'Lemons': Quality Uncertainty and the Market Mechanism" [1] is a widely cited seminal paper in the field of economics which explores the concept of asymmetric information in markets. The paper was written in 1970 by George Akerlof and published in the Quarterly Journal of Economics .
Akerlof is perhaps best known for his article, "The Market for Lemons: Quality Uncertainty and the Market Mechanism", published in the Quarterly Journal of Economics in 1970, in which he identified certain severe problems that afflict markets characterized by asymmetric information, the paper for which he was awarded the Nobel Memorial Prize. [10]
Economist George Akerlof in his 1970 paper "The Market for Lemons: Quality Uncertainty and the Market Mechanism" [3] identified the severe lemon problems that may afflict markets characterized by asymmetrical information. [4]
Created Date: 8/30/2012 4:52:52 PM
George Akerlof's paper The Market for Lemons [4] introduced a model to help explain a variety of market outcomes when quality is uncertain. Akerlof's primary model considers the automobile market where the seller knows the exact quality of a car. In contrast, the buyer only knows the probability of whether a vehicle is good or bad (a lemon).
The Market for Lemons", 1970 paper by the economist George Akerlof; Interview with John J. Woodcock III of West Hartford, Connecticut. Woodcock, as a Connecticut State Representative from South Windsor, was the proponent of the first "Lemon Law" enacted in the United States. Archived 2012-12-12 at archive.today
It was one of a series of papers to address the important phenomenon of adverse selection in economics, pioneered by the classic study of the lemon problem in used car markets by George Akerlof, [7] and celebrated by the paper by Michael Rothschild and Stiglitz on adverse selection in the insurance market. [8]
In his papers, Schelling quotes the well-known "The Market for Lemons: Quality Uncertainty and the Market Mechanism" paper written in 1970 by George Akerlof. [8] Similarly, Granovetter cited the Nash Equilibrium game in his papers.