Source: EconLog
by Kevin Corcoran
“When there is asymmetric information in a market, one party has more information relevant to a transaction than another party. This can lead to suboptimal outcomes. Probably the most famous statement of this issue is the famous paper by George Akerlof, The Market for Lemons. To quickly recap, this paper considers the used car market. There is asymmetric information between prospective buyers and sellers of used vehicles. If I’m selling my used car, I know more about the condition of that car that you, the prospective buyer.” (09/06/24)
https://www.econlib.org/the-half-life-of-asymmetric-information/