Study on Outbreak of Quality Deterioration in Markets Using Agent Simulation

Abstract

In this study, we examine solutions for lemon markets using signaling by agent simulations. In lemon markets where the quality of merchandises deteriorates, the deterioration is solved by appropriate signals are provided by sellers. We notice the outbreak of quality deterioration in the market with appropriate signals. Through simulation results, we found that sellers with lower quality arise in the market and get higher profit because of their lower cost to provide merchandises.