Why good used cars vanish from the market: Akerlof's lemons
30seconds
Why can a market of willing buyers and sellers fall apart? In 1970 the economist George Akerlof showed that when only the seller knows a used car's quality, buyers can pay only for the average car.
Owners of good cars then keep them, the average drops, and the offer drops with it. Run the market yourself: 100 cars, one offer, and watch the best cars walk away round after round. Then let buyers inspect and see every car sell.
Deep dive · 4 min
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