The Market for Lemons
The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.
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Quality uncertainty
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Akerlof's used-car market: sellers know the lemon; buyers do not. Rational buyers discount all cars. Owners of good cars withdraw. The market collapses or fills with junk. Adverse selection in one story.
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Beyond cars
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The model applies to insurance, labor markets, finance, and any credential that is costly to verify. Information asymmetry is not a footnote; it shapes equilibrium.
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With crypto and search
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Read next to Bitcoin and PageRank: both are responses to trust and information problems in different domains. Economics papers age; this one does not.