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Robust predictions and hard information in the market for lemons

Author

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  • Yamaguchi, Yusuke
  • Yamashita, Takuro

Abstract

The literature on informationally robust predictions has focused mostly on soft information. In a stylized adverse selection model, we show that hard information enables trade, even when the unique equilibrium outcome without it is no-trade.

Suggested Citation

  • Yamaguchi, Yusuke & Yamashita, Takuro, 2025. "Robust predictions and hard information in the market for lemons," Economics Letters, Elsevier, vol. 256(C).
    • Handle: RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004057
    DOI: 10.1016/j.econlet.2025.112568
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    Keywords

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    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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