The impact of quality uncertainty without asymmetric information on market efficiency

  title={The impact of quality uncertainty without asymmetric information on market efficiency},
  author={Segismundo S. Izquierdo and Luis R. Izquierdo},
The market effects of quality variability and uncertainty have classically been studied in the particular context of asymmetric information, focusing on the sellers' expected behavior and the phenomenon of adverse selection. Looking instead at the consumers' expected behavior, this paper uses an agent-based model to illustrate how quality uncertainty by itself can lead to market failure, even in the absence of asymmetric information. Assuming that buyers estimate the quality of the product they… CONTINUE READING


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