The Market for Lemons

   The “lemon” problem was initially posed by Nobel Prize winner Akerlof in his seminal article of 1970 and showed how a market with unbalanced information, called information asymmetry, can lead to complete disappearance or to offerings with poor quality where bad products (lemons) wipe out the good ones. Empirical evidence for Akerlof’s theory came originally from the market of used cars, where the lemon is a well known problem. However the theoretical model of the “lemon” problem has proven also to be valid on other markets and in comparable situations like internal markets. The theory is also been used more and more in IS research especially since the emerging e-commerce initiatives and the continuous growth of e-markets and auctions. In this chapter we bring a description of the theory by presenting its nomological network and its linkages to other well known theories in IS research. The relevance for the theory is shown to explain phenomenon’s in the IS discipline. An overview is given of current and past IS articles using the Lemon Market theory (LMT) together with a bibliographical analysis of the references to the original Akerlof article.

Read the full article as chapter 11 of the book: Information Systems Theory: Explaining and Predicting Our Digital Society, Vol. 1



About jangdevos
I'm an IT/IS professor, a late Baby Boomer, married with Ann and father of Hélène and Willem, a Stones fan and interested in almost everything. I work at the UGent (campus Kortrijk), Belgium. My research domain are: IT Governance in SMEs, IT/IS Security, IT Management, IT Project Management, IT Trends and IT/IS failures.

One Response to The Market for Lemons

  1. Ramonita Aiu says:

    I got what you mean , thankyou for posting .Woh I am thankful to find this website through google. “The test and use of a man’s education is that he finds pleasure in the exercise of his mind.” by Carl Barzun.

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