Warranty as a Signal of Quality and the Lemons Problem: Evidence from the Automotive Industry
Management Innovation and Modern Enterprise Transformation: 45MGT 2025
Information asymmetry between buyers and sellers in automotive markets creates significant challenges for consumers seeking to assess vehicle quality before purchase. This study examines the effectiveness of warranties as quality signals in addressing Akerlof’s “lemons problem,” where buyers cannot distinguish between high-quality “peaches” and low-quality…