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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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    References listed on IDEAS

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    1. Anne-Katrin Roesler & Balázs Szentes, 2017. "Buyer-Optimal Learning and Monopoly Pricing," American Economic Review, American Economic Association, vol. 107(7), pages 2072-2080, July.
    2. Navin Kartik & Weijie Zhong, 2023. "Lemonade from Lemons: Information Design and Adverse Selection," Papers 2305.02994, arXiv.org, revised Sep 2025.
    3. Jerry R. Green & Jean-Jacques Laffont, 1986. "Partially Verifiable Information and Mechanism Design," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 447-456.
    4. Kartik, Navin & Zhong, Weijie, 2026. "Lemonade from lemons: information design and adverse selection," Theoretical Economics, Econometric Society, vol. 21(1), January.
    5. Bull, Jesse & Watson, Joel, 2007. "Hard evidence and mechanism design," Games and Economic Behavior, Elsevier, vol. 58(1), pages 75-93, January.
    6. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2015. "The Limits of Price Discrimination," American Economic Review, American Economic Association, vol. 105(3), pages 921-957, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    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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