scholarly journals The Lemons Problem in Markets for Strategy

2016 ◽  
Vol 1 (2) ◽  
pp. 71-89 ◽  
Author(s):  
Mary J. Benner ◽  
Todd Zenger
Keyword(s):  
Lemons Problem

scholarly journals How big is the “lemons” problem? Historical evidence from French wines

2021 ◽  
pp. 103824
Author(s):  
Pierre Mérel ◽  
Ariel Ortiz-Bobea ◽  
Emmanuel Paroissien
Keyword(s):  
Historical Evidence ◽  
Lemons Problem

New House Premiums, Market Conditions, and the Decision to Purchase a New Versus Existing House

2019 ◽  
Vol 41 (3) ◽  
pp. 379-410
Author(s):  
Bruce L. Gordon ◽  
Daniel T. Winkler
Keyword(s):  
Asymmetric Information ◽  
Information Sharing ◽  
Trend Analysis ◽  
The Internet ◽  
Market Conditions ◽  
Feedback Mechanisms ◽  
Time On The Market ◽  
Internet Information ◽  
Over Time ◽  
Lemons Problem

In this paper, we examine how the new house premium has changed over time. We propose that the new home premium can largely be attributed to the “lemons problem” from Akerlof (1970). Recent research suggests that the growth of the Internet has significantly reduced the lemons problem for many products. Our results suggest that the new house premium is about 5.6% without considering time-on-the-market (TOM) and has been declining. This premium ranges from 14.6% (1998) to −2.8% (2010). The average new house premium is 13.3% considering TOM, and ranges from 22.5% (1998) to 5.0% (2010). A trend analysis reveals that new house premiums have fallen 0.8%–0.9% annually, consistent with the Internet, information sharing, and reputation feedback mechanisms reducing the lemons problem associated with asymmetric information.

scholarly journals Smart Buyers

2016 ◽  
Vol 5 (2) ◽  
pp. 239-270 ◽  
Author(s):  
Mike Burkart ◽  
Samuel Lee
Keyword(s):  
Information Asymmetries ◽  
Cross Sectional ◽  
Outside Option ◽  
Lemons Problem

Abstract We study transactions in which sellers fear being underpaid because their outside option is better known to the buyer. We rationalize various observed contracts as solutions to such smart buyer problems. Key to these solutions is granting the seller upside participation. In contrast, the lemons problem calls for granting the buyer downside protection. But, in either case, the seller (buyer) receives a convex (concave) claim. Thus, contracts usually associated with the lemons problem, such as debt or cash-equity offers, can be equally well manifestations of the smart buyer problem, although the two information asymmetries have opposite cross-sectional implications. Received December 23, 2014; accepted May 23, 2016 by Editor Uday Rajan.

scholarly journals Lemons Markets and the Transmission of Aggregate Shocks

2013 ◽  
Vol 103 (4) ◽  
pp. 1463-1489 ◽  
Author(s):  
Pablo Kurlat
Keyword(s):  
Asymmetric Information ◽  
Adverse Selection ◽  
Asset Markets ◽  
Aggregate Shocks ◽  
Tax Rate ◽  
Cyclical Variation ◽  
Dynamic Economy ◽  
Financial Transactions ◽  
Lemons Problem

I study a dynamic economy featuring adverse selection in asset markets. Borrowing constrained entrepreneurs sell past projects to finance new investment, but asymmetric information creates a lemons problem. I show that this friction is equivalent to a tax on financial transactions. The implicit tax rate responds to aggregate shocks, generating amplification in the response of investment and cyclical variation in liquidity. (JEL D82, D92, E32, E44, G31, L15)

scholarly journals Does signalling solve the lemons problem?

2015 ◽  
Vol 23 (4) ◽  
pp. 227-229
Author(s):  
Timothy Perri
Keyword(s):  
Lemons Problem
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