scholarly journals Mergers under Asymmetric Information - Is there a Lemons Problem?

2003 ◽  
Author(s):  
Thomas Borek ◽  
Stefan Buehler ◽  
Armin Schmutzler
Keyword(s):  
Asymmetric Information ◽  
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 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)

Aspects of the Lemons Problem as Treated in Jewish Law

2008 ◽  
Vol 23 (2) ◽  
pp. 379-424 ◽  
Author(s):  
Aaron Levine
Keyword(s):  
Asymmetric Information ◽  
Moral Education ◽  
Product Liability ◽  
Brand Names ◽  
Third Party ◽  
Character Trait ◽  
Jewish Law ◽  
Asymmetrical Information ◽  
The Government ◽  
Lemons Problem

Commercial transactions are often characterized by asymmetric information between the buyer and seller: one side of the market, usually the seller, knows more about the quality of the product or service offered than the other side. In his 1970 seminal article, George Akerlof predicted that unless counteracting forces are in place, this asymmetric information phenomenon will cause the volume of transactions in this marketplace to shrink to the point where only the most inferior version of the product, called a lemon, will be traded.Practically speaking, numerous institutions mitigate the asymmetrical information problem so that the marketplace does not deteriorate into a lemons market. These countervailing forces include seller guarantees, brand names, product liability laws, consumer screening, third-party comparisons, and the institution of standards and certification by the government or consumer and industry groups.My purpose here will be to analyze one aspect of the lemons problem from the perspective of an imagined society governed entirely by Jewish law and ethics. I will refer to this society as a Torah society. Specifically, I will show how Jewish warranty law counteracts the lemons problem and compare its solutions to those of American warranty law as well as state lemon laws in the U.S.Warranty law works best to counteract the lemon problem if it operates in an environment of trust. As I will show, Jewish law puts the task of moral education in the hands of parents and teachers with the goal of producing the character trait of trustworthiness.

AGENCY PROBLEM DALAM PENERAPAN PEMBIAYAAN AKAD MUDHARABAH PADA PERBANKAN SYARIAH

ALQALAM ◽  
2016 ◽  
Vol 33 (1) ◽  
pp. 46
Author(s):  
Aswadi Lubis
Keyword(s):  
High Risk ◽  
Asymmetric Information ◽  
Human Resources ◽  
Moral Hazard ◽  
Adverse Selection ◽  
Agency Problem ◽  
Agency Problems ◽  
Islamic Banking ◽  
The Public

The purpose of writing this article is to describe the agency problems that arise in the application of the financing with mudharabah on Islamic banking. In this article the author describes the use of the theory of financing, asymetri information, agency problems inside of financing. The conclusion of this article is that the financing is asymmetric information problems will arise, both adverse selection and moral hazard. The high risk of prospective managers (mudharib) for their moral hazard and lack of readiness of human resources in Islamic banking is among the factors that make the composition of the distribution of funds to the public more in the form of financing. The limitations that can be done to optimize this financing is among other things; owners of capital supervision (monitoring) and the customers themselves place restrictions on its actions (bonding).

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