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Related is the theory of the "Lemon Market": https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons If the buy
by hulium 2y ago
Related is the theory of the "Lemon Market": https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons
If the buyer cannot estimate the quality of the product before buying, the sellers will reduce quality or be forced to by competition. Buyers lose trust and the market can collapse.
- ghaff 2y agoThe problem there is that the owner of a car that’s good as far as they know (but not a given as a major repair of an older car could be just around the corner) may sell anyway so they can buy a new car even if they think they’re not getting a good deal. But certainly of cars that know they have major not easily detectable problems will be much quicker to sell or trade in. (I know.)
- pjc50 2y agoThe Akerloff Market for Lemons paper is really important. It explains so many things, like why people very rarely pay upfront for mobile games or online articles.
- datavirtue 2y agoAccording to this, Walmart ruined toasters.
- pjc50 2y ago?
- littlestymaar 2y agoYet people buyer newspaper without having read them… The reason why people don't pay for online stuff is mostly because we're used to get free stuff online + the fact that online payment remains cumbersome (even moreso since the businesses have all incentives to pish you to a regular payment model instead of a one-shot one). It has nothing to do with information asymmetry. And that a paper that reads like a parables like this was deemed Nobel-prize worthy tells us more about economics as an academic field than about the paper itself.