132,298 research outputs found
Overconfidence in the Markets for Lemons
No full textWe extend Akerlof (1970)’s “Market for Lemons” by assuming that some buyers are overconfident. Buyers in our model receive a noisy signal about the quality of the good that is on display for sale. Overconfident buyers do not update according to Bayes’ rule but take the noisy signal at face value. We show that the presence of overconfident buyers can stabilize the market outcome by preventing total adverse selection. This stabilization, however, comes at a cost: rational buyers are crowded out of the market
Overconfidence in the Market for Lemons
No full textWe extend Akerlof ’s (1970) “Market for Lemons†by assuming that some buyers are overconfident. Buyers in our model receive a noisy signal about the quality of the good that is at display for sale. Overconfident buyers do not update according to Bayes’ rule but take the noisy signal at face value. The main finding is that the presence of overconfident buyers can stabilize the market outcome by preventing total adverse selection. This stabilization, however, comes at a cost: rational buyers are crowded out of the market.Adverse Selection; Market for Lemons; Overconfidence
Overconfidence in the Market for Lemons
No full textWe extend Akerlof ’s (1970) “Market for Lemons” by assuming that some buyers are overconfident. Buyers in our model receive a noisy signal about the quality of the good that is at display for sale. Overconfident buyers do not update according to Bayes’ rule but take the noisy signal at face value. The main finding is that the presence of overconfident buyers can stabilize the market outcome by preventing total adverse selection. This stabilization, however, comes at a cost: rational buyers are crowded out of the market
Imperfect Competition and Efficiency in Lemons Markets
No full textThis paper studies the impact of competition on the degree of inefficiency in lemons markets. More precisely, we characterize the second-best mechanism (i.e., the optimal mechanism with private information) in a stylized lemons market with finite numbers of buyers and sellers. We then study the relationship between the degree of efficiency of the second-best mechanism and market competitiveness. The relationship between the first-best and second-best mechanisms is also explored. JEL Classification: C7 ; D4 ; D61 ; D82
Imperfect competition and efficiency in lemons markets
No full textThis paper studies the impact of competition on the degree of inefficiency in lemons markets. More precisely, we characterize the second-best mechanism (i.e., the optimal mechanism with private information) in a stylized lemons market with finite numbers of buyers and sellers. We then study the relationship between the degree of efficiency of the second-best mechanism and market competitiveness. The relationship between the first-best and second-best mechanisms is also explored
The efficiency of decentralized and centralized markets for lemons
No full textIn markets with adverse selection, when average quality is low and frictions are small decentralized trade produces a greater surplus than predicted by the competitive model: under decentralized trade some high-quality units of the good trade whereas, due to the "lemons problem", only low-quality units trade in the competitive equilibrium. This suggests a reason why these markets are often decentralized. Remarkably, under some conditions payoffs are competitive as frictions vanish, even though all qualities trade
Lemons, William D.
No full textDora Lemons - wifehttps://stars.library.ucf.edu/cfm-ch-memoranda-1930/1432/thumbnail.jp
LEMONS sensitivity and precision assessment.
No full text<p>(A) Demonstration of the different splice-junction predictions made by LEMONS and their occurrence in the examined organism’s coding regions, according to genome annotation. P—"true" splice-junction; TP (true positive)–correct identification of splice-junction by LEMONS; FN -false negative; FP—false positive splice-junctions. TP+FN (true positive + false negative)–total number of true splice-junctions in the examined organism, according to genome annotation; TP+FP (true positive + false positive)–total number of splice-junctions predicted by LEMONS; (B-C) LEMONS-based identification of splice-junctions. Our analysis accounted for the distance (in nucleotides) between the splice-junction predicted by LEMONS and the true splice-junction. The analysis presented is of five species: <i>M</i>. <i>musculus</i>, <i>G</i>. <i>gallus</i>, <i>A</i>. <i>carolinensis</i>, <i>X</i>. <i>tropicalis and D</i>. <i>rerio</i>. (D) Comparison of LEMONS similarity, sensitivity and precision for the five species tested. For absolute numbers, see <a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0143329#pone.0143329.s007" target="_blank">S3 Table</a>.</p
Fast lemons and sour boulders: testing crossmodal correspondences using an internet-based testing methodology
No full textAbstract. According to a popular family of hypotheses, crossmodal matches between distinct features hold because they correspond to the same polarity on several conceptual dimensions (such as active–passive, good–bad, etc.) that can be identified using the semantic differential technique. The main problem here resides in turning this hypothesis into testable empirical predictions. In the present study, we outline a series of plausible consequences of the hypothesis and test a variety of well-established and previously untested crossmodal correspondences by means of a novel internet-based testing methodology. The results highlight that the semantic hypothesis cannot easily explain differences in the prevalence of crossmodal associations built on the same semantic pattern (fast lemons, slow prunes, sour boulders, heavy red); furthermore, the semantic hypothesis only minimally predicts what happens when the semantic dimensions and polarities that are supposed to drive such crossmodal associations are made more salient (e.g., by adding emotional cues that ought to make the good/bad dimension more salient); finally, the semantic hypothesis does not explain why reliable matches are no longer observed once intramodal dimensions with congruent connotations are presented (e.g., visually presented shapes and colour do not appear to correspond)
A Breath of Fresh Air? Firm types, scale, scope and selection effects in drug development
No full textThis paper measures differences in the innovation performance of different types of firms in the pharmaceutical industry. We compare the innovation performance of incumbent firms with entrants, controlling for differences in the scale and scope of research, both at the firm level and at the project level. To do so, we develop a simple analytical framework of drug development, which we use to estimate a structural model, using data on 3,000 drug R&D projects in preclinical and clinical trials in the US during the 1980s-early 1990s. Key to our approach is a careful attention to the issue of selection – firms choose which compounds to advance into clinical trials. This choice depends upon the likelihood of success, but also upon economies of scale and scope, and strategic considerations about product cannibalization. It also depends upon how the costs of development and the rewards of success are shared within organizations and between alliance partners. After controlling for selection, we find that: a) incumbent pharmaceutical firms draw their compounds from better statistical distributions; b) over time, learning or environmental selection make entrants firms more similar to the established firms both in terms of selection behavior and research productivity; c) compounds licensed by pharmaceutical firms are at least as likely to succeed as internal developed projects, inconsistent with the “lemons” hypothesis; d) firm scale improves innovation performance but not scale at the project level.firm capabilities; drug development process; market for technology
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