A Student of Year 12 in Harrow International School Hong Kong

Nanqi Zhou

Abstract


George Akerlof introduced the idea that due to asymmetric information between the buyer and the seller in the lemons market, the market for second-hand vehicles will eventually go on the wane. Parallel to this argument, this essay discusses the extent of problem caused by information asymmetry in the financial market, with the most prominent issues being adverse selection, moral hazard and principal agent problem. Yet, with more regulation from the government and the market, some of these problems can be ameliorated, thus reducing the role that asymmetric information plays in the financial market.


Full Text:

PDF


DOI: http://dx.doi.org/10.22158/jepf.v4n3p260

Refbacks

  • There are currently no refbacks.


Copyright (c) 2018 Nanqi Zhou

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Copyright © SCHOLINK INC.   ISSN 2377-1038 (Print)    ISSN 2377-1046 (Online)