Tag Archives: economic transactions

Have I been pursuing a dead end, part 2

We cannot escape information asymmetries. They are everywhere. They are environmental factors to be noted and, if necessary, mitigated. The same cannot be said of adverse selection. Adverse selection is built upon information asymmetry. Though adverse selection does not exists wherever there is information asymmetry. This has puzzled me for a while. How does this […]

Adverse Selection

George Akerlof wrote “The Market for Lemons” in 1971. This paper explored the idea of adverse selection, which occurs when one party has more or better information than the other party in involved in the same transaction. Adverse selection is one of the ideas that explain information asymmetry. Akerlof illustrated adverse selection with a used […]