One: lemon market problem (defective product market problem)

For example, in the second-hand car market, due to the information asymmetry between buyers and sellers, it is obvious that sellers have more information than buyers, and the information between them is asymmetric. Buyers won't believe what the seller says, even if the seller says it, it's no use. The only way for the buyer is to reduce the price to avoid the risk loss caused by information asymmetry (that is, the buyer prefers to buy a car at a lower price to avoid that the car he bought is not as good as the seller said). The buyer's low price also makes the car seller unwilling to provide high-quality products.

Therefore, in this case, because it is difficult for sellers to get a good price (determined by the information asymmetry in the used car market and the psychological status of buyers), the demand for high-quality cars in the second-hand market is gradually decreasing, while cars with low prices and average quality are more popular. As a result, low-quality products flooded the market and high-quality products were driven out of the market.

But there is such a contradiction that the market is full of low-quality products, which the buyer does not want to see. Buyers tend to buy higher quality products at lower prices. And sellers tend to sell at high prices and low quality. . So ... . . Buyers try to avoid entering the used car market. . . . As a result, the used car market has shrunk.

This concept is beneficial to China's stock market or talent market.

In the talent market: individuals tend to go to enterprises with high wages and good environment, but due to information asymmetry, enterprises want to hire employees with lower wages in order to avoid hiring unqualified talents, while employees tend to make use of maximum choice, which reduces the number of companies with low wages. . . . . . .

In China's stock market, everyone from Zheng to San the Monkey King to Yin walks a tightrope under the condition of asymmetric information. Once unsuspecting investors finally found the other side of the shiny coin, the market began to make adverse selection, the wire rope broke, the stock price plummeted and investors lost confidence. Therefore, the CSRC will strengthen supervision, remove the "lemon" in the stock market and rebuild investors' confidence.

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