To illustrate this situation Akerlof (1970) -in "The market for lemons"– proposes a model that describes the the assimetric information in the market for used cars. The analysis provided by Akerlof not only explains how private information can lead to malfunctioning of markets, but also indicate the frequency with which these information asymmetries and long-term consequences occur. Examples thereof, in addition to the disappearance of transactions in the used car market are also social segregation in the labor market and the difficulties of the elderly to buy individual health
To illustrate this situation Akerlof (1970) -in "The market for lemons"– proposes a model that describes the the assimetric information in the market for used cars. The analysis provided by Akerlof not only explains how private information can lead to malfunctioning of markets, but also indicate the frequency with which these information asymmetries and long-term consequences occur. Examples thereof, in addition to the disappearance of transactions in the used car market are also social segregation in the labor market and the difficulties of the elderly to buy individual health