How we change what others think, feel, believe and do
The Lemons Market
A 'Lemons Market' is a situation where there is a market of people known as 'lemons'. A 'lemon' is a person who is vulnerable in some way. When there are sufficient numbers of them in a targetable form, they form a marketplace all of their own.
As lemons are naive, they attract marketers and sales people who will take advantage of them, selling them goods which are over-priced, damaged or from which the person will never gain much value.
In the most successful lemons markets, the lemons never know they have been deceived. Any market where there are high profits may be considered a lemons market.
The market for used cars contains many car dealers who will sell problematic cars to unsuspecting customers, who are unable to detect the problems.
Open markets attract dealers who will spin a fine spiel and make it seem they are selling something wonderful and rare at giveaway prices.
The financial crash of 2008 was arguably the result of a lemons market, where investors put their money into funds and complex instruments where the investors (and often also their financial advisors, who also were lemons) did not understand how profits were made.
Markets are based on an asymmetry between customers and suppliers. The basic market occurs where suppliers have what customers want and there is a consequent barter or purchase that satisfies both partiers.
Markets are often based on asymmetry of information, often where sellers know more than the purchasers. When the purchaser's information is very low, then the seller may tell lies without being detected as the purchaser is forced to trust them as an authority.
Lemons markets may appear to the lemons as a place for great bargains. They are attracted to touted benefits without wondering how the market works. They may want to boast to others of their magical-seeming success and so do not ask questions in case they themselves are disillusioned.
This need to sustain an illusion may be the hardest part of lemons marketing. Complexity, 'trade secrets', collusive 'independent referees' and other methods may be used for this. Confidence tricksters seek individual lemons and may play larger groups of them with such as the Ponzi Scheme.
Just because a market is legitimate does not mean it is not a lemons market. Any market where benefits are overly asymmetric may be considered lemony. Many traditional professions collude to sustain this as they cloak their practices in the mystery of expertise and police their members for maintaining the illusion rather than being fair to customers.
The opposite to a lemons market is an open market, where full disclosure and open information lets customers see just what they are receiving and also just how their suppliers are benefiting from the sale. The internet has been hugely powerful in this area, although it seems there is always a plentiful supply of lemons.