Information, Uncertainty & Signals: Checkpoint 1

Akerlof, Spence and Stiglitz shared the 2001 Nobel prize for studying such markets.

When buyers cannot tell quality, owners of good cars refuse the average price, and the market shifts toward lemons.

Customers reveal their risk level through the policy they choose.

Shareholders and managers, and patients and doctors, are common examples.

George Stigler explained price dispersion using search costs in 1961.