Aspects of the Lemons Problem as Treated in Jewish Law
Commercial transactions are often characterized by asymmetric information between the buyer and seller: one side of the market, usually the seller, knows more about the quality of the product or service offered than the other side. In his 1970 seminal article, George Akerlof predicted that unless co...
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| Format: | Electronic Article |
| Language: | English |
| Check availability: | HBZ Gateway |
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| Published: |
Cambridge Univ. Press
2008
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| In: |
Journal of law and religion
Year: 2008, Volume: 23, Issue: 2, Pages: 379-424 |
| Online Access: |
Volltext (lizenzpflichtig) Volltext (lizenzpflichtig) |
| Summary: | Commercial transactions are often characterized by asymmetric information between the buyer and seller: one side of the market, usually the seller, knows more about the quality of the product or service offered than the other side. In his 1970 seminal article, George Akerlof predicted that unless counteracting forces are in place, this asymmetric information phenomenon will cause the volume of transactions in this marketplace to shrink to the point where only the most inferior version of the product, called a lemon, will be traded.Practically speaking, numerous institutions mitigate the asymmetrical information problem so that the marketplace does not deteriorate into a lemons market. These countervailing forces include seller guarantees, brand names, product liability laws, consumer screening, third-party comparisons, and the institution of standards and certification by the government or consumer and industry groups.My purpose here will be to analyze one aspect of the lemons problem from the perspective of an imagined society governed entirely by Jewish law and ethics. I will refer to this society as a Torah society. Specifically, I will show how Jewish warranty law counteracts the lemons problem and compare its solutions to those of American warranty law as well as state lemon laws in the U.S.Warranty law works best to counteract the lemon problem if it operates in an environment of trust. As I will show, Jewish law puts the task of moral education in the hands of parents and teachers with the goal of producing the character trait of trustworthiness. |
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| ISSN: | 2163-3088 |
| Contains: | Enthalten in: Journal of law and religion
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| Persistent identifiers: | DOI: 10.1017/S0748081400002332 |