The Theory of the Lemon Markets in IS Research

  • Jan Devos
  • Hendrik Van Landeghem
  • Dirk Deschoolmeester
Part of the Integrated Series in Information Systems book series (ISIS, volume 28)


The “lemon” problem was initially posed by Nobel Prize winner Akerlof in his seminal article of 1970 and showed how a market with unbalanced information, called information asymmetry, can lead to complete disappearance or to offerings with poor quality where bad products (lemons) wipe out the good ones. Empirical evidence for Akerlof’s theory came originally from the market of used cars, where the lemon is a well-known problem. However, the theoretical model of the “lemon” problem has proven also to be valid in other markets and in comparable situations like internal markets. The theory is also been used more and more in Information Systems (IS) research especially since the emerging e-Commerce ­initiatives and the continuous growth of e-markets and auctions. In this chapter we bring a description of the theory by presenting its nomological network and its linkages to other well-known theories in IS research. The relevance for the theory is shown to explain the phenomenon in the IS discipline. An overview is given of current and past IS articles using the Lemon Market theory (LMT) together with a bibliographical analysis of the references to the original Akerlof article.


Lemon market Information asymmetry Adverse selection Moral hazard Trust 



Association of computing machinery


Auction theory


Communications of the ACM


Decision systems research


European Journal of Operational Research


Enterprise resource planning


Expected utility theory


Game theory


Incomplete contract theory


Institute of Electrical and Electronics Engineers


Information systems


Information system research


Independent software vendor


Information technology


Information and management


Journal of Management Information Systems


Lemon market theory


Management information system


MIS quarterly


Personal digital assistant


Prospect theory


Radio frequency identification


Small- and medium-sized enterprise


Willingness to accept


Willingness to pay


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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  • Jan Devos
    • 1
  • Hendrik Van Landeghem
  • Dirk Deschoolmeester
  1. 1.University College West Flanders, Ghent University AssociationKortrijkBelgium

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