Market for Lemons: When Dishonesty Prevails

Christoph E. Mandl
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Christoph E. Mandl: University of Vienna, Mandl, Lüthi & Partner

Chapter 18 in Managing Complexity in Social Systems, 2019, pp 163-169 from Springer

Abstract: Abstract What happens in a market when buyers expect a certain product quality only to find out later that the sellers misinformed them? George Akerlof asked this question in the context of used cars. In particular, he wondered why people purchased new cars, rather than purchased used cars. His hypothesis was that people were suspicious of the motives of the sellers of used cars. After all, sellers of used cars have an informational advantage over buyers. Sellers know if their cars are lemons—a lemon being a slang word for a second-hand car in poor condition—while buyers may find out only after their purchase.

Date: 2019
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DOI: 10.1007/978-3-030-01645-6_18

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