Crypto doesn’t have to be a market for lemons
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“The bad cars tend to drive out the good.”
— George Akerlof
In his 1970 paper “The Market for Lemons,” economist George Akerlof explained what happens when sellers have more information than buyers.
In the market for used cars, for example, the odds you’ll get a lemon are disproportionately high due to an “asymmetry in available information.”
Because buyers can’t tell good cars from bad ones, they end up trading at the same price — a price that’s too low for a good car and too high for a bad one.
Owners of bad cars, knowing what they have, are therefore incentivized to sell (usually to buyers who can only…
