Classroom Games
A Market for Lemons
Bibliographic Data
| ID | 14855462 |
|---|---|
| Authors | Charles A Holt (0000-0002-7282-0185, University of Virginia, Charlottesville, Virginia.), Roger Sherman (University of Virginia, Charlottesville, Virginia.) |
| Year | 1999 |
| Volume | 13 |
| Issue | 1 |
| Pages | 205-214 |
| Publication date | 1999-02-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Perspectives (JOURNAL) |
| Journal identifiers | ISSN: 0895-3309 • E-ISSN: 1944-7965 |
| Publisher | American Economic Association (PUBLISHER • US) |
| DOI | 10.1257/jep.13.1.205 |
| OpenAlex | W2106415273 |
| Language | EN |
| Citations received | 2 |
| References cited | 5 |
The incentives that arise in markets with asymmetric information are illustrated in the classroom exercise presented here. Student sellers choose both a quality ‘grade’ and a price for their products. Initially, both prices and grades for all sellers are posted, and buyers select from these offerings. In this full-information setup, the market prices and grades quickly reach efficient levels that maximize total surplus. Next, although sellers continue to choose grades and prices, only prices (not grades) are posted for buyers to see when they shop. The grades and prices then fall to inefficiently low levels. The observed market outcomes in this exercise can stimulate useful discussion of asymmetric information, market failure, and remedies such as quality standards and warranties
Business · Economics · Incentive · Information asymmetry · Microeconomics · Auction Theory and Applications · Innovations in Educational Methods · School Choice and Performance · Marketing
| Unique citing works | 2 |
|---|---|
| Citations per year | 0.18 |
| Citation span | 2015 - 2022 (8) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 2 |