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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 .
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).
In the market for used cars, lemon automobiles (analogous to bad currency) will drive out the good cars. [33] The problem is one of asymmetry of information. Sellers have a strong financial incentive to pass all used cars off as good cars, especially lemons.
The move marks another blow to Musk, whose Tesla seems to face new declines in its stock price daily, losing over $25 billion in value the day of the Lemon interview, which extended past $30 ...
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Good news on the U.S. economy is back to being bad for Wall Street, and the stock market slumped Tuesday following better-than-expected reports on the job market and business activity. The S&P 500 ...
A standard example is the market for used cars with hidden flaws, also known as lemons. George Akerlof in his 1970 paper, " The Market for 'Lemons' ", highlights the effect adverse selection has on the used car market, creating an imbalance between the sellers and the buyers that may lead to a market collapse.
And good news for self-driving cars Research firm S&P Global Mobility projects U.S. autonomous vehicle sales will reach 230,000 units by 2034 following renewed progress at Alphabet’s Waymo and ...