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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).
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.
Alison Southwick: You know the old saying, When life gives you lemons, make lemonade. Well, this year has been mostly a sweet little beverage for investors, as the S&P 500 has gained almost 30%.
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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 ...
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.
Debt held by the public, or the amount the U.S. owes to outside lenders after borrowing on financial markets, is already at about 100% of GDP, with that ratio soon expected to blow past the all ...