Completion date: March 3, 2003

Is the cherry a lemon? It sounds a little weird, but it is actually a (small) allusion in the development of economics, which is quite interesting. ...

1970, the economist Professor Akalov published a paper to discuss the characteristics of the used car market. Because the owner of a used car has used the car for a period of time, he knows the performance of the car very well, but most people who buy a car can't judge the quality of the car. Therefore, the information of the seller and the buyer is different, that is, there is "information asymmetry" between them. Moreover, cars with good performance are usually reluctant to sell, so most of them are sent to the problematic used car market, mostly "lemons" that make people grin.

Because of the different information between buyers and sellers, most of them are lemons in the used car market. Therefore, even if someone wants to buy a car and someone wants to sell it, it may not be possible to negotiate a deal in the end. There is no transaction in the market.

The example of the second-hand car market profoundly reflects the key influence of "information" on market transactions. This is a direct impact and challenge to the concept that some people want to buy and others want to sell in the market that was regarded as the standard by economists at that time. Therefore, Akalov's groundbreaking paper has become one of the important classics in economic literature.

The characteristics of lemon market are not only interesting in academic discussion, but also have some enlightenment to our daily life?

Washington state in the northwest corner of the United States is rich in cherries, and the products are sold to all States in the United States. Cherries are big and small, big, beautiful and delicious, and the price is relatively high. Therefore, cherries can be selected according to size first, and then sold according to specifications and grades, each leading the way. Of course, cherries can be picked or not, and the picked cherries are "sold in grades" according to their size; Those that have not been picked are "mixed and sold" in different sizes. However, picking cherries requires manpower and material resources, and the screening skills of novices and experienced people are very different. So cherry merchants will decide for themselves whether to bother to pick cherries. After a period of development and exploration, cherry merchants in producing areas have become two types: the first type does not pick cherries at all, and all cherries are "mixed and sold"; On the one hand, the second type of businessmen will pick cherries, on the other hand, they will let some batches of cherries mix together and not pick them.

Of course, good grade cherries can be graded according to their prices, but what about those "mixed"? Because the sellers of cherries know the quality of these cherries, and the buyers of cherries may be thousands of miles away in Boston, new york, there is also information asymmetry between buyers and sellers. Will these cherries be treated equally because they are all "mixed" and have only one price, just like Akalov's "lemon"?

But when you think about it, the "mixed" cherries sold by the second type of merchants are actually a bit different. Since these businessmen can pick them instead of picking them, it is probably because they see that these batches of cherries are not in good color and are not worth picking. Therefore, both are "mixed" cherries, and the "average quality" sold by the second type of merchants is likely to be worse than that sold by the first type of merchants. If this inference is true, the price sold by the second type of merchants should be lower than that sold by the first type of merchants, and both of them are "mixed sales" of cherries.

Two American economists analyzed more than 1000 transaction data in 1983, and found that the price of the second type of merchants was "indeed" lower than that of the first type of merchants, and both of them were "mixed sales". That is to say, in the case of unequal information, the market has developed a function to distinguish the quality of cherries according to the "signals" of these "mixed cherries" from the first-class or second-class merchants. So after such a discussion, the two scholars came to the conclusion that "cherry is not lemon"! This sentence seems absurd at first glance, but if you understand the twists and turns behind it, I'm afraid you will smile and nod.

For economists, the conclusion that "cherry is not lemon" proves once again that market function can distinguish the competitive power through its own strength and demand when supply and demand are met. For ordinary consumers, the inspiration of this allusion is that as long as the market plays a role, we can roughly judge the quality of goods from the "price". And the deeper meaning is that everyone can actually try to become a (small) market, cultivate their own judgment, and then consider the choice and ask for more happiness. Think about it, why do you "always" go to fixed fruit stalls, grocery stores, hospitals and restaurants? Did you also find some "signals" and develop some judgments? ……

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Author: Xiong Bingyuan

Source: Selected from The Tale of the Lighthouse by Xiong Bingyuan, Social Science Literature Publishing House.

Economic analysis of occupation phenomenon

Completion date: September 2002-14

The phenomenon of "occupying a seat" occurs from time to time in life, especially on the university campus. No matter whether it is the winter of March 9 or the scorching sun, there are always a group of "seat-occupying people" faithfully waiting in front of the teaching building with books in their hands. As soon as the door opened, they rushed into the classroom, saw the seats, and hurriedly put the books and other things on the table. Only in this way can they breathe a sigh of relief and guard their "colony" proudly. Later people can only look at their seats and sigh, ranking second. The audio-visual effect of the class was greatly reduced, so I couldn't help complaining and shouting "unreasonable seat occupation".

The author believes that from the perspective of economics, when we assume that all people are rational people, rational people pursue the maximization of interests, and the system itself does not involve moral issues. If the designation of a system can meet the pursuit of maximizing the interests of rational people, then it not only realizes fairness and justice in the universal sense, but also is a reasonable system. Below, the author uses economic principles to analyze the rationality of seat-occupying behavior.

Occupy a seat-the choice of rational people

What do you mean by occupying a seat? It means that you can have a seat that makes you satisfied. You don't have to stretch your neck to catch every movement and every look of the teacher through many obstacles. You don't have to pick up your glasses to identify the blackboard with difficulty. You don't have to stretch your ears to be afraid of missing something. All this means that when you listen attentively like your classmates, you can concentrate more easily, get better listening results and finally get better grades. All this is just because you occupy a good seat.

Of course, there is no such thing as a free lunch, and occupying a seat requires a certain price. You may not be able to stay in bed for a while or have a leisurely breakfast. They are the opportunity cost you pay to occupy a seat. The key lies in which is the opportunity cost and income. For a student, the significance of getting good grades is self-evident, and when you look at them with a positive attitude, the above opportunity cost can be reduced to a small or even negative value-getting up early is good for health and energy, but there is no need to waste time eating breakfast. From this point of view, the opportunity cost you pay for occupying a seat is very small, but the income you get is much greater, so occupying a seat is undoubtedly the best choice for rational people.

Give a seat to others-rational people consider marginal quantities.

We found that those students who occupy seats often occupy seats not only for themselves, but also for their roommates. Of course, this may show that these students are more careful and thoughtful. But from the perspective of economics, it contains the principle that "rational people consider marginal quantity".

When you have arrived in the classroom ahead of time, you can occupy an extra seat with a little effort. There is almost no marginal cost here. What kind of marginal benefits will this behavior bring? First of all, your roommate may think you are considerate and improve your evaluation; Secondly, even if the person you serve doesn't think this is a virtue, but regards it as an investment, he will certainly pay a certain degree of return for it under the principle of equal exchange in appropriate occasions.

This situation is called "accommodating people's feelings" by the people, which is small and beneficial. Why not do it?

Fixed occupier-give full play to comparative advantages and make trading groups profit.

If you need a person to occupy the seat in your dormitory every day, is it better for different people to take turns to occupy the seat every day or for a fixed person to occupy the seat? The answer is the latter. This embodies the economic principle that people give full play to their comparative advantages, create value, and trade with people with other comparative advantages, so that all parties in the transaction can benefit from it.

It is not necessary to stipulate that seats are occupied by turns. Everyone's income has not changed. The problem is that different people have different opportunity costs in this matter. Xiao Wang is used to going to bed late. Getting up for half an hour is tantamount to torture. Getting up reluctantly to complete his "sacred mission" may lead to listlessness and yawning all day. On the contrary, Xiao Li is used to getting up early, so it is easy for him to occupy a seat. Xiao Zhangcan not only gets up early, but also has an advanced means of transportation-bicycle, so it is easier for him to occupy a seat. In the comparison of their relative advantages, Xiao Zhang, Xiao Li and Xiao Wang. Then when making a choice among the three people, Xiao Zhang is undoubtedly the most suitable, while Xiao Wang may use the time of staying up late to fetch water for everyone, and Xiao Li may use the time of getting up early to buy breakfast. So they give full play to their comparative advantages, and as a result, the whole trading group benefits from it.

Seat Rotation System —— Advantages and Disadvantages of Another System Design

People who attack "occupying a seat" often point out that occupying a seat violates the principle of fairness and everyone should have equal opportunities to occupy a good seat. So they put forward a system that they think is a fair seat rotation system, that is, everyone is seated by number and transferred by row every week.

The advantages of this system are that, first of all, it has strong operability, and at the same time it provides people with clear expectations. You don't have to worry about occupying a seat, because the seat is waiting for you there, so you can arrange your time more flexibly. Secondly, as its supporters say, in the long run, everyone has a chance to get a good seat (of course, there are also bad seats), thus achieving a superficial fairness.

The disadvantage of this system is that it is very likely to lead to inefficient results, so it deviates from the principle of fairness in essence. First of all, because it is mandatory rather than free choice based on personal will, there will be two situations. On the one hand, people who give some seats the highest evaluation will not get seats. On the other hand, some people may have low evaluation of these seats because they are not interested in this course. In this way, these seats can't play the greatest role for them, and even lead to unnecessary resource loss because of their absence. The emergence of this trend is like the contrast between the poor and the rich. Can you say it's fair? Secondly, it is obvious that the seat rotation system cannot realize the above-mentioned benefits of occupying seats.

To sum up, we can easily find that the disadvantages of the seat rotation system outweigh the advantages, and the fundamental reason for its inefficiency lies in its violation of the principle of competition. Examining the "seat rotation system", we will find how similar it is to the thinking mode of planned economy. The lessons of economic backwardness brought by decades of single planned economy tell us that the concept of competition must be strengthened.

Using "administrative" means-overcoming the inefficiency of seat occupation

At this point, we have seen the advantages brought by seat occupation. However, in the concrete implementation of this system, due to improper use, it may also cause inefficiency. So let's discuss this inefficient suppression.

For example, classes are held at 8 o'clock and the doors are opened at 6 o'clock. Because of competition, it means that the occupant must arrive before 6 o'clock, which increases the opportunity cost of occupying a seat and affects people's profit. Therefore, under certain circumstances, when people think that the opportunity cost exceeds its income, they will withdraw from the competition, making the advantages brought by seat occupation unable to play. What's more, because someone is bound to stick to his position, and this determined person, as a rational person, will strive to expand the income to make up for this increased opportunity cost. Because there are no other competitors at this time, there is no limit to how many seats he wants to occupy, so he has a monopoly on seats, and those who have a high evaluation of seats still can't get seats, which leads to inefficiency and unfairness. So is it necessary to limit the number of seats? The answer is no and it is impossible (because no one can monitor how many seats it occupies). Actually, just adjust the opening hours. When it was adjusted to half an hour before class, this situation was effectively curbed because of the intervention of a large number of competitors.

Another example is that some people occupy seats for a long time in an attempt to do it once and for all. The measure to deal with this behavior is to take back their books before opening the door to ensure that everyone has an equal opportunity to compete.

In short, just as the government intervenes in the "market failure" in the market, adjusting the seat occupation system by "administrative" means can also play a positive role.

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Author: Zhang Lixin

Source: Peking University Law School