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The Theory of the Lemon Markets in IS Research

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

Abstract

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.

Keywords

Lemon market Information asymmetry Adverse selection Moral hazard Trust 

Abbreviations

ACM

Association of computing machinery

AT

Auction theory

CACM

Communications of the ACM

DSS

Decision systems research

EJOR

European Journal of Operational Research

ERP

Enterprise resource planning

EUT

Expected utility theory

GT

Game theory

ICT

Incomplete contract theory

IEEE

Institute of Electrical and Electronics Engineers

IS

Information systems

ISR

Information system research

ISV

Independent software vendor

IT

Information technology

I&M

Information and management

JMIS

Journal of Management Information Systems

LMT

Lemon market theory

MIS

Management information system

MISQ

MIS quarterly

PDA

Personal digital assistant

PT

Prospect theory

RFID

Radio frequency identification

SME

Small- and medium-sized enterprise

WTA

Willingness to accept

WTP

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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