{
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 "@type": "DefinedTerm",
 "@id": "https://wulfkaal.github.io/entities/lemons-problem",
 "identifier": "kaal:entity:lemons-problem",
 "name": "Lemons problem",
 "termCode": "lemons-problem",
 "inDefinedTermSet": {
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 "author": {
  "@type": "Person",
  "name": "Wulf A. Kaal",
  "identifier": "https://orcid.org/0000-0003-0757-275X"
 },
 "dateModified": "2026-07-29",
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   "value": 2
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   "value": [
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 "subjectOf": [
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3949098-020",
   "identifier": "kaal:claim:3949098-020",
   "text": "In traditional underwriting, investors who cannot distinguish underwriters by reputation create free riding: once free riding occurs, underwriters stop investing in screening and try to free ride on others, producing a lemons problem.",
   "abstract": "As a result, free-riding on other's reputation may occur. Once free riding occurs, traditional underwriters will likely stop investing in their screening and instead attempt to free ride on others. This creates what is known as a lemons problem in the law and economics literature.",
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098",
   "datePublished": "2021",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "traditional underwriting markets",
    "investors cannot distinguish underwriters based on reputation"
   ],
   "source_pdf_sha256": "04297905564a6092b2db7640561f58fd374d3114c79527357bad09d11b909819",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/6607458-033",
   "identifier": "kaal:claim:6607458-033",
   "text": "Without a verification record accessible to counterparties, generative markets suffer a generative-quality failure analogous to the lemons problem: counterparties price on the distribution of observed qualities, which systematically underprices high-quality generators.",
   "abstract": "The computative analog is a generative-quality failure: when the quality of a generative distribution is unobservable, counterparties price on the distribution of observed qualities, which systematically underprices high-quality generators.",
   "citation": "Wulf A. Kaal, Computative Economics A Framework for Economic Analysis under Computational Abundance (2026). SSRN: https://ssrn.com/abstract=6607458",
   "datePublished": "2026",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "holds when the quality of a generative distribution is unobservable to counterparties"
   ],
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   "status": "current"
  }
 ],
 "description": "2 claims in the published works of Wulf A. Kaal carry the concept tag 'lemons-problem'. Derived node: a roster, not an adjudicated definition."
}