The idea that when a seller has private information about the value of good,buyers will discount the price they are willing to pay due to adverse selection is known as the:

Question

Quizplus · Accepted Answer

The lemons principle, also known as "lemon market" or "market for lemons," describes the phenomenon of information asymmetry where sellers possess private information about the quality or value of a good, which cannot be observed by the buyer. As a result, buyers may only be willing to pay an average price for the good, assuming that it is of average quality, which creates a market for low-quality goods (i.e., "lemons") and can drive high-quality goods from the market. This principle was first introduced by economist George Akerlof in his famous paper "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism."

The Idea That When a Seller Has Private Information About