Nobel Prize 2001

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Transcript of Nobel Prize 2001

Page 1: Nobel Prize 2001

Nobel Prize 2001

Page 2: Nobel Prize 2001

On the market of light bulbs both

customer and salesman are unaware of the quality of each single bulb

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However, on the market of used cars only

salesman is aware of the true quality of his product

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Competition on this market leads to

adverse selection, which in perspective is able to destroy the entire market

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Nobel Prize 2001

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According to the conception of market

signals salesman can give his customers signals about quality of his product

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Nobel Prize 2001 is a great example of

how economists find out the problem and then deal with it