Summary
Keywords
Asymmetry (Quotation Subject)
Information Asymmetry (Award-Winning Work)
asymmetric information market failure
certified pre-owned
Carfax (Business Operation)
information asymmetry
asymmetric information economics
asymmetric information economics definition
Asymmetric
carfax
Review
Economics (Field Of Study)
Full Transcript
George Akerlof, a Nobel Prize-winning economist, analyzed the theory of adverse selection – which occurs when an offer conveys negative information about what is being offered. In the market for used cars, Akerlof posited that sellers have more information about the car’s quality than buyers. He argued that this leads to the death spiral of the market, and market failure. However, the market has developed solutions such as warrantees, guarantees, branding, and inspections to offset information asymmetry. Microeconomics Course: http://bit.ly/20VablY Next video: http://bit.ly/1TzdfDZ
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