Warranties, moral hazard, and the lemons problem
type: Item
instance of: scholarly article
title: Warranties, moral hazard, and the lemons problem
zbMATH Open document ID: 0649.90028
DOI: 10.1016/0022-0531(88)90147-0
author: Winand Emons
published in: Journal of Economic Theory
publication date: 1988-01-01T00:00:00Z
review text: This paper analyzes the following problem. Consumers cannot observe product quality at the time of purchase so that only warranties can induce firms to supply high-quality products. Yet, if consumers can adjust the care with which they use products, the presence of warranties may result in more frequent product failure. The paper studies what kinds of contracts will be offered in a competitive market characterized by such a double-sided moral hazard problem.
Mathematics Subject Classification ID: 91B60
zbMATH DE Number: 4060951
zbMATH Keywords: warranties
zbMATH Keywords: product failure
zbMATH Keywords: competitive market
zbMATH Keywords: double-sided moral hazard
MaRDI profile type: Publication
full work available at URL: 0022-0531(88)90147-0
OpenAlex ID: W2058097231
cites work: Equilibria in monopolistically competitive insurance markets
cites work: Sequential Equilibria
cites work: Monopoly and product quality
cites work: Consumer Misperceptions, Product Failure and Producer Liability
description: scientific article; zbMATH DE number 4060951