SMALL W RLDS
GDC 2003 Make Better Games
Reputation
& the Lemon Problem
The work of Toshio Yamagishi of Hokkaido U tackles the Lemon Problem.
The seller of a used car knows more than the buyer.
A lemon goes for $10k, and a good car for $20k.
They compromise on $15k through bargaining.
But good sellers will
therefore stay out of the market (and only deal
with those who trust them) because they
want the price they deserve.
The result is that the open market only has bad cars for sale.