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Market for Lemons

Akerlof’s (1970) result that asymmetric information about product quality between buyer and seller can cause a market to unravel: buyers, unable to distinguish good from bad, offer only an average price; sellers of high-quality goods exit; quality and price spiral down. The canonical motivating case for institutional remedies — warranties, certification, return policies, reputation systems — i.e. the kinds of public, enforceable commitments that the Commitment-based Semantics tradition formalises. Recreated as a theory-of-mind inference result over a choreographic protocol in Pact - A Choreographic Language for Agentic Ecosystems.

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