Start with “the market for lemons” by George akerlof. https://en.m.wikipedia.org/wiki/The_Market_for_Lemons https://en.m.wikipedia.org/wiki/The_Market_for_Lemo

Start with “the market for lemons” by George akerlof. https://en.m.wikipedia.org/wiki/The_Market_for_Lemons https://en.m.wikipedia.org/wiki/The_Market_for_Lemons The case you are confused by is a version of the model there. The relevant material is covered in any intermediate-to-advanced microeconomics textbook.