Asymmetric information is characteristic of many economic exchange actions in the economy. Akerlof focuses on the buying and selling of used automobiles in his article on lemons.
Buying a home is another example of asymmetric information. The seller of the home knows far better than the buyer the character of the home.
a. What is the role of the listing in the home buying situation?
b. What types of information not on the listing would the buyer wish to know that the seller may know given the seller”s experience of living in the home?
c. How does this asymmetric information case influence the potential to buy/sell and its associated risks from the buyer”s point of view?
d. To paraphrase Oscar Hammerstein, there is no limit to the number of people that turn away from a badly written listing. Would it also be true about the number of people drawn to a good listing? Given your experience, compare the representation of the house in the listing and your impressions when you actually saw the property.