The lemon market
Buyers can't tell a good used car from a lemon. How many lemons does it take before good cars stop selling at all?
A hundred used cars are for sale, and only their owners know which are lemons. Buyers offer what the average car is worth, so the best owners walk away and the average drops. The middle panel counts the good cars that still sell. Raise the share of lemons and watch the market fall off a cliff.
Board: Auctions and Mechanism Design →One dial and two tabs. The market is solved round by round, so every number is the same each time you set the dial.
try this Drag Lemons in the lot from 15 to 25, then switch to Owners offer a warranty.
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