George Akerlof shared the 2001 Nobel prize in economics for his work on asymmetric information, which describes the situation when buyers don’t know as much about a product as sellers do. His most famous example of this situation is the market for used cars. Sellers know a lot about their used cars, but potential buyers don’t. So it’s hard for buyers to tell a good car from a bad one, popularly known as a “lemon”. As long as there’s some chance that a used car will turn out to be a lemon, a buyer will never pay full value for…
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