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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]
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).
Only "lemons" (used cars in bad conditions, specifically with value at most equal to p) are traded; Player 1 can guarantee herself a payoff of zero by bidding zero; hence, in equilibrium, p = 0; Since only "lemons" (used cars in bad conditions) are traded, the market collapses; No trade is possible even when trade would be economically ...
The Market for Lemons is a work that examines this problem in more ... Theory." The New Palgrave Dictionary of Money and Finance, vol. 2. Macmillan: London and ...
Efficient market theory, or hypothesis, holds that a security's price reflects all relevant and known information about that asset. One upshot of this theory is that, on a risk-adjusted basis, you ...
Explore the exciting world of Lululemon Athletica (NASDAQ: LULU) with our expert analysts in this Motley Fool Scoreboard episode. Check out the video below to gain valuable insights into market ...
In Sept. 2024, Michaels appeared in a "Make America Healthy Again" ad with healthcare entrepreneur Brigham Buhler. Alex Clark is the host of the "Culture Apothecary" podcast.