> Knowing just slightly more about the value of your car than a potential buyer can make it impossible to sell it
> This means that the owner of a carefully maintained, never-abused, good used car will be unable to get a high enough price to make selling that car worthwhile.
Both statements are a wrong understanding of the phenomenon. The market collapses because the transactions happen outside of the market. Something similar has in my opinion happened on the job market. Most good jobs are outside the regular job boards. Most good applicants could not be bothered to apply for a job opening but are asked by recruiters or friends.
Under this model, if the transaction of quality goods happened anywhere, some buyer reached information symmetry. But among the assumptions in the article is that sellers have no alternate market (they just "leave", whatever that means) and there is no credible way to provide information on the quality of goods. But then how do buyers know to lower their prices with what's left in the market?
There're a lot of unreasonable assumptions and maybe that's why the paper was rejected 3 times. You can also run the thought experiment backwards: lemons should be removed from the market first since, as stated, those are the ones that sell, but then you should be left with a market full of peaches.
I really don't like how the OP phrased this one, because it's about more than knowing the value of your car.
This paper was published in 1970, but it demonstrated how markets can fail, as well as a method of correcting that failure. Imagine the following scenario:
There's a used car market of private sellers that is comprised of a mixture of peaches (good) and lemons (bad). To keep it simple, let's assume we're just talking about one model of car.
Additionally, there's no way to identify which car is a lemon, but it's known that they're worth much less than a peach because of the much higher cost of maintenance.
If you have a market where the above conditions exist (only seller knows if car is lemon/peach, and a mixture of lemons/peaches), you'd potentially end up with a market failure.
This is because sellers of peaches can't get the price they want for their car, whereas sellers of lemons can profit over the expected value of theirs.
The problem with assuming that lemons would be removed from the market is that any buyer of a lemon would want to sell it once they've realized what they purchased, putting it back on the market. This effect compounds to where a greater percentage of cars being sold on the market are lemons, further depressing the price and removing peaches from the market.
Akerlof's solution to fix the market was to introduce warranties. Owners of peaches would be willing to offer warranties, because they trusted the quality of the cars they were selling. Eventually, buyers would see the lack of a warranty as the indication of a car being a lemon, forcing the sellers of lemons to either offer a warranty or lower their asking price below the market price of the vehicle.
His work applied to the function of other markets, like insurance (older people are the costliest for health insurance companies) and employment markets (Certain classes of people have difficulty finding a job despite similar skills), as well as the institutions that have formed (Medicare, professional licensing) to improve the functioning of these markets.
No, it does not. Your eye has no receptors to detect a chair, a stone or a dog. They detect a spectrum. Why should the nose work different?
"infrared theory of smell - a theory that the olfactory sense organ functions as an infrared spectrometer. It assumes that odorants each have a unique infrared absorption spectrum, which produces transient cooling of the cilia in the olfactory epithelium."
Turin's spectral theory of olfaction has been disproven. I think even Turin himself admits that "perhaps it's not exclusively spectral", which means a lot, when you know Luca ;)
Ok, let's phrase it differently. In response to well-evidenced critique, raised after that 2002 book, the vibration theory of olfaction has been watered down so far that it is now arbitrary.
It didn't help the scientific debate that Turin's 2002 book contains some ad-hominem insults to scientists who had voiced challenges to his theory.
If the vibration theory has ever succeeded to uncover structure-smell relationships (like in the application with the US military that you quote), it is because the vibrational spectrum of a molecule encodes its shape and internal flexibility. It does not mean that all olfactory receptors perform spectroscopy, as Turin claimed (note the past tense - he stepped back from that claim at least 8 years ago).
How can a book from 1982 "debunk" experimental evidence that has been obtained 20-39 years later? It cannot.
Much has happened in olfaction since 1982. A very small proportion of that work has actually debunked the vibration theory of olfaction.
It's a pity, since that theory had some very appealing properties. But it just doesn't align with the current experimental evidence.
edit: By the way, all of the observations mentioned can be explained by classical ligand-receptor interactions. No need for esoteric assumptions like spectroscopy performed by olfactory receptors.
There are anecdotal observations and theoretical arguments that support the vibration theory. But all aspects of it can be explained using less exotic models of ligand-receptor interaction. Proponents of the vibration theory are ignorant of those alternative explanations. The experimental evidence does not give a conclusive picture, either. Some experiments have clearly falsified aspects of the vibration theory, whereas the key experiments that support it suffer from systematic weaknesses.
Therefore, unless texperimental evidence appears that clearly supports that olfactory receptors perform electron-tunneling spectroscopy, I remain unconvinced.
> This means that the owner of a carefully maintained, never-abused, good used car will be unable to get a high enough price to make selling that car worthwhile.
Both statements are a wrong understanding of the phenomenon. The market collapses because the transactions happen outside of the market. Something similar has in my opinion happened on the job market. Most good jobs are outside the regular job boards. Most good applicants could not be bothered to apply for a job opening but are asked by recruiters or friends.