Advanced Micro · intro
What moves on the Adverse Selection (Lemons Problem) diagram
A trust shock cuts willingness to pay, pushing good cars out of the market and dragging average quality and prices down together: adverse selectionadverse selectionBad types crowding out good ones when quality is hidden before a deal, the lemons problem. accelerating.
The market runs on a fragile stock of buyer trust.
A fraud scandal breaks: wound-back odometers across thousands of listings.
Buyers slash what they'll pay for anything they can't verify.
Good cars exit first, quality craters, and prices chase it down: the unraveling spiral Akerlof described, running in fast-forward.
Examiners ask this as: scandal, odometer fraud, trust collapse, fake listings, market confidence shock.
Other scenarios on Adverse Selection (Lemons Problem)