the.com/asymmetric information
one side knows the car's a lemon, the other side just knows the price.
means a transaction where one party has more or better information than the other, letting them exploit the gap.
from coined in economics via george akerlof's 1970 paper on used cars, which showed that when sellers know more than buyers, good products get driven out by bad ones.
nobel prizeakerlof, spence, stiglitz won 2001 economics nobel for this
lemon problemnamed after slang for a defective used car
market failurecan cause entire markets to collapse or vanish
signaling fixdegrees, warranties exist mainly to close the gap
for instance
used car market — akerlof's original 1970 lemons example
health insurance — insurers guess risk, applicants know their real health
job interviews — candidates know their real skill, employers just guess