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LEMONS AND SUPERGAMES *
Author(s) -
Dolton Peter J.
Publication year - 1983
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.1983.tb00446.x
Subject(s) - economics , mathematical economics , microeconomics
This paper generalizes an earlier paper by Heal (1976) in which the‘lemons problem’is analysed in an exchange framework over time. Heal showed that the Akerlof (1970) rule that bad goods (lemons) always drive out good may not always be a valid one. Heal's anti‐lemons result is also shown to be a Balanced Tempta‐Equilibrium (B.T.E.) in the supergame. But it is also shown, paradoxically, that the B.T.E. can itself be dominated by certain strategies, hence there is a direct counterpart to the constituent version of the Lemons Game in its supergame analogue.